S&P Global Ratings affirmed the B- long-term issuer credit rating on Hong Kong-based Hopson Development Holdings Ltd.
The outlook was revised to positive from stable.
The rating agency expects the developer's rental income to grow by more than 50% to HK$2 billion in 2018, compared to 30% growth in 2017. However, S&P said in a release that Hopson has yet to prove it is capable of running a sizable portfolio of investment properties.
S&P estimates that the company will generate enough rental income to cover 55% to 60% of its gross interest expense for the year. The agency noted that Hopson can use its large unencumbered completed inventory and investment property assets to obtain financing from secured borrowings or issue asset-backed securities, likely with longer maturities, meaning that the company has a decent chance of improving liquidity.
The revised outlook reflects S&P's expectation that Hopson will continue to enhance its income stability for debt servicing by growing its investment portfolio and as a result, its rental income.
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.