S&P Global Ratings changed its outlooks on Beijing Capital Group Co. Ltd. and its property development arm, Beijing Capital Land Ltd., to negative from stable due to expectations that the group's leverage will remain elevated over the next 12 to 24 months with risk of further deterioration.
The rating agency affirmed its issuer credit ratings for the group and subsidiary at BBB- and BB+, respectively.
Beijing Capital Group's leverage ratio is expected to remain at the current elevated level of about 13x to 14x for the next two years, while the group's total adjusted debt is expected to reach 200 billion yuan by 2019-end. Meanwhile, Beijing Capital Land's leverage is predicted to remain high at 15x to 16x in 2019-2020, and its contracted sales are expected to exceed 100 billion yuan in 2020 and reach 140 billion yuan in 2021, S&P said.
The rating agency added that the negative outlook indicates rising business concentration risk for the group, as it relies more heavily on the volatile property development sector for profit and cash flow.
As of Aug. 8, US$1 was equivalent to 7.04 yuan.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.