Fitch Ratings downgraded Chinese homebuilder Modern Land (China) Co. Ltd.'s long-term foreign and local currency issuer default ratings and senior unsecured rating to B from B+.
The outlook is stable.
The rating agency attributed the downgrade to its belief that Modern Land's leverage will gradually increase to above 45% in 2019-2020 due to higher premiums from aggressive land acquisitions. Fitch also pointed to what it called the company's consistently weak EBITDA margin, which constrains the company's ability to deleverage, despite an increase in contracted sales.
Fitch also downgraded Modern Land's senior-unsecured rating to B from B+ and gave it a recovery rating of RR4.