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Fitch lowers Huarong Real Estate's long-term issuer default rating

Fitch Ratings lowered Chinese property company Huarong Real Estate Co. Ltd.'s long-term issuer default rating to A- from A and placed all the ratings on Rating Watch Negative.

The rating agency affirmed Huarong Real Estate's short-term IDR at F1 and downgraded the senior unsecured notes issued by its Huarong Universe Investment Holding Ltd. unit to A- from A.

Fitch said the rating downgrade factors in the weakened connection between Huarong Real Estate and its parent, China Huarong Asset Management Co. Ltd., as well as the property company's exposure to noncore activities.

The Rating Watch Negative takes into account the uncertainty of Huarong Real Estate's strategy, as it refocuses its business model, as well as the potential losses stemming from its noncore investments.

The rating agency said it expects Huarong Real Estate to prioritize its business agenda and refocus on property-related distressed-asset development, noting that it will resolve the Rating Watch Negative if it gets adequate clarity on the company's refocused business model, including a stabilized portfolio composition.