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S&P upgrades China Evergrande ratings

S&P Global Ratings upgraded its long-term issuer credit rating on China Evergrande Group to B+ from B, while raising the long-term issue rating on the China-based real estate developer's outstanding senior unsecured notes to B from B-.

The outlook is positive.

S&P said China Evergrande has strengthened its liquidity and leverage, thanks to its reduced short-term debt and decreasing exposure to alternative capital.

The rating agency assumes that the company's debt-to-EBITDA ratio will improve to 5.3x to 5.5x in 2018-19 from 7.1x in 2017, and its EBITDA interest coverage will rise to 2.2x to 2.4x in the same period from 1.9x in 2017.

S&P attributed the positive outlook to its view that the company's leverage will decrease over the next 12 months and that its uneven capital structure and high exposure to alternative financing might further improve.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.