Untitled

China Property Watch: ToughOperating Conditions Could FurtherPolarize Developers

Primary Credit Analyst:

Bei Fu, Hong Kong (852) 2533-3512; [email protected]

Secondary Contacts:

Matthew Kong, Hong Kong (852) 2533-3595; [email protected]

Christopher Lee, Hong Kong (852) 2533-3562; [email protected]

Dennis Lee, Hong Kong (852)2533-3563; [email protected]

Laura C Li, CFA, Beijing (86) 10-6569-2930; [email protected]

Christopher Yip, Hong Kong (852) 2533-3593; [email protected]

Table Of Contents

Contracted Sales Update And Prospects

Financing Conditions Will Be Toughest For Small Players

Bond Issuances Will Slow Somewhat

Aggressive Land Acquisitions

Implementation Of Policy Measures Remains Key To Sales Performance

Appendix

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 8, 2014 1

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China Property Watch: Tough OperatingConditions Could Further Polarize Developers(Editor's Note: This is the second of a quarterly series on Chinese property developers.)

Chinese real estate developers might have to strike a fine balance between achieving higher sales targets and

maintaining prices as the property market cools. This might be particularly hard, given that developers have set

aggressive sales target for 2014 and operating and financing conditions will likely weaken from their favorable

positions in 2013. Sales on a national level have been dismal so far this year. Compared with 26.6% growth in 2013,

residential property sales in China declined 10% from January to April 2014, according to National Bureau of Statistics.

At the same time, average selling prices are weakening. In May 2014, housing prices increased in only 44 of the 70

major cities that the government tracks, the lowest since January 2013.

Standard & Poor's Ratings Services expects that sales volume will gradually begin to improve from the second half of

2014 as Chinese property developers cut prices to boost sales. Thanks to their strong cash balance at the beginning of

the year, most Chinese developers that we rate have been slow to lower prices so far this year. But these developers

will be under greater pressure in the second half of the year to generate cash flows and meet their ambitious sales

targets. On average, rated developers set a target that is 20% higher than the actual sales in 2013, which was a year of

historically high sales for most companies.

With some relaxation of the sector and credit policies, strong supply and ongoing demand from owner-occupiers will

support some recovery of sales volume, in our opinion. But prices are likely to continue to slide because of large

inventory in some markets. Therefore, we adjusted our base-case assumption to reflect our expectation that the

average selling price (ASP) will fall 5% in 2014 compared with a rise of 11.5% in 2013. During the previous downturn

in 2011-12, ASP declined less than 3%, according to China Real Estate Index System (CREIS). The price correction

could be more severe this time given the high base in 2013. We assume a 5% decline in ASP would support 10%

volume growth, given large supply. Overall, our base case factors in a 5% year-on-year growth of sales. This compares

with about 10% growth in 2011 and 2012, and 27% in 2013.

Despite the weakening operating conditions, we believe the credit trend for rated developers will be neutral this year

as our recent rating actions--some positive and some negative--already reflect. We expect most large national players

to be able to weather the market correction ahead. Most rated developers are listed and we view them as

midsize-to-large companies. Among the rated developers, companies with more aggressive debt-funded growth

appetite or weak execution ability will face downgrade risks. We expect sales and financing prospects to be gloomy for

smaller players, especially the unrated ones, some of who may default or be acquired by others.

Margin compression will be a structural trend for the sector as land costs outgrow selling prices. We expect the healthy

players to sustain a gross margin of 30% over the next two to three years. Operating and cost efficiency will become

competitive factors as product differentiation becomes increasingly more difficult. Companies with brand loyalty and

geographic and product diversification will be able to better weather through downcycles.


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Contracted Sales Update And Prospects

• Contracted sales were off to a slow start this year. The 27 rated developers that report monthly performance had

achieved just 27% of their full-year target from January to April (see table 1). We view this figure as still reasonable

because companies' full-year targets are generally aggressive, and sales in the first quarter of the year are usually

slow in China because of the Chinese new year holidays and cold weather in the northern provinces.

Table 1

Contracted Sales Performance Of Select Rated Developers

2013 budget 2013 actual 2014 budget 2014 actual* 2014 actual*/2014 target

--Bil. RMB--

China Vanke Co. Ltd. 166.0 170.0 200.0 67.0 33.5%

Poly Real Estate Group Co. Ltd. 120.0 123.5 160.0 36.4 22.7%

China Overseas Land & Investment Ltd. 80.0 109.6 111.6 36.3 32.5%

Country Garden Holdings Co. Ltd. 62.0 106.0 128.0 41.1 32.1%

Evergrande Real Estate Group Ltd. 100.0 100.4 110.0 44.4 40.4%

China Resources Land Ltd. 57.0 68.1 70.0 13.7 19.5%

Shimao Property Holdings Ltd. 55.0 67.1 80.0 18.0 22.5%

Greentown China Holdings Ltd. 55.0 62.1 65.0 17.2 26.5%

Sunac China Holdings Ltd. 34.0 54.7 65.0 14.3 21.9%

Longfor Properties Co. Ltd. 46.0 48.1 57.0 12.6 22.1%

Gemdale Corp. 40.0 45.0 60.0 10.0 16.7%

Guangzhou R&F Properties Co. Ltd. 42.0 42.2 70.0 19.0 27.1%

Agile Property Holdings Ltd. 42.0 40.3 48.0 13.2 27.5%

Kaisa Group Holdings Ltd. 23.0 23.9 28.0 6.2 22.1%

Future Land Development Holdings Ltd. 20.0 20.6 24.0 5.6 23.2%

KWG Property Holding Ltd. 16.0 16.3 21.0 6.9 32.6%

CIFI Holdings (Group) Co. Ltd. 14.0 15.3 22.0 6.8 30.9%

Franshion Properties (China) Ltd. 18.0 14.6 30.0 3.4 11.5%

Central China Real Estate Ltd. 13.0 14.0 17.0 3.0 17.3%

China Overseas Grand Oceans Group Ltd. 13.0 13.6 18.5 3.0 16.2%

Hopson Development Holdings Ltd. 15.0 11.3 14.0 1.2 8.7%

Yuzhou Properties Co. Ltd. 9.0 11.0 13.0 2.9 22.3%

China SCE Property Holdings Ltd. 8.0 10.8 14.0 3.9 27.7%

Fantasia Holdings Group Co. Ltd. 10.0 10.2 15.0 0.9 6.3%

China Aoyuan Property Group Ltd. 9.0 10.0 15.0 2.6 17.3%

Powerlong Real Estate Holdings Ltd. 8.0 9.4 12.0 2.0 16.8%

Mingfa Group (International) Co. Ltd. 9.0 6.3 8.0 0.7 8.6%

Total 1,084.0 1,224.4 1,476.1 392.3 26.6%

*Contracted sales from January to April. RMB--Chinese renminbi. Source: Company announcements.

• Nationwide, year-on-year sales fell close to 10% demonstrating the weaker capability of the smaller players (see

chart 1).


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China Property Watch: Tough Operating Conditions Could Further Polarize Developers

Chart 1

• According to CREIS, month-on-month growth of ASP in the top 100 cities has moderated since November 2013 and

turned negative in May for the first time in 23 months. Year-on-year growth had slowed to 7.8% until May from

11.5% at the end of 2013. However, ASP continued to grow faster in top-tier cities than the rest of the market. ASP

in the top 10 cities had grown 13.9% until May (see chart 2).


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Chart 2

• Uncertain credit conditions have tempered the sustainable demand stemming from urbanization and higher

disposable incomes. More expensive mortgages and lack of mortgage availability have prevented some buyers from

entering the market. Some potential purchasers have adopted a wait-and-see attitude to take advantage of declining

prices. In our view, as long as financing conditions improve for home buyers, owner-occupier demand will support

property sales.

• Large supply will weigh on the market this year, particularly in areas with lower end-user demand, such as in some

third- and fourth-tier cities. According to Shanghai Yiju Real Estate Research House, close to 20 cities have

inventory of more than 15 months. These cities include Tianjin, Hangzhou, and Shenyang. Wenzhou tops the list

with inventory of 42 months. Most rated developers have abundant available-for-sale properties this year.

• Overall sales should gradually pick up. Developers have greater incentive to achieve higher sales even at the cost of

lower prices. Recent initiatives by central and local governments to back mortgage lending and loosen

property-related policies will also support sales growth. In our base case, we expect a 10% increase in sales volume

for Chinese developers, representing a slower rate but from a strong base last year.

• Our base-case scenario of a 5% decline in ASP in 2014 reflects our view that the rapid growth in ASP in 2013 is not

sustainable and will continue to deteriorate over the year as the pressure to cut prices increases. ASP in the overall

market grew 11.5% in 2013, with a more than 20% increase in some tier-one cities.

• Only companies with good sales execution, right product and geographic coverage, and access to low-cost

financing will benefit from a recovery in sales, in our view. For the others, especially the large number of small


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developers, most of which are unlisted and not rated, cash sales may slow at a time when access to financing is

uncertain. This could put pressure on these companies' liquidity.

• China's property market is not geographically homogeneous. While we believe tier-one and tier-two cities will

remain more resilient to a market correction, lower-tier cities with large supply and limited demand may face

challenges even if the government eases purchase restrictions.

Financing Conditions Will Be Toughest For Small Players

• Funding costs will increase and the availability of funding from banks and the bond market will tighten in 2014.

Offshore bond issuances were at historically high volumes and low costs in 2013. The availability of financing from

banks and bond issuances could be limited to the larger and more reputable developers. Smaller players that can't

raise funds through these channels would be at a disadvantage. They will have to rely on other sources of funding,

such as shadow banking products, which could be more expensive and have uncertain refinancing prospects.

• The availability and cost of financing from shadow banking will be questionable. A regulatory crackdown on shadow

banking and defaults on some trust products earlier this year suggest such financing may not be sustainable and

costs could rise quickly and considerably. So far, interest costs remain reasonable for most rated developers

compared with their peak in 2011. More companies borrow through trusts and entrusted products to subsidize or

substitute bank borrowings. Such funding channels allow for a more flexible use of money and do not constitute a

bank's lending quota. Among other reasons, the tighter availability of mortgages and delayed release of funds are

responsible for slow sales. The decision of some banks in some cities to scrap the preferential mortgage rate for

first-time home buyers has also contributed to slow sales.

• It seems that the central government could be considering releasing more liquidity into the system through several

measures, such as the required reserve ratio. But the government is likely to walk a fine line between being cautious

and supportive. On the one hand, it doesn't want a repeat of the overnight rebound of the property sector as in

2008-2009. On the other hand, the government can't afford to allow the sector to remain weak for a prolonged

period given its importance to the economy.

• M2 growth rate remains largely stable but at the low end of 13% (see chart 3).


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Chart 3

• Mortgage loans continue to grow, but at a slower pace (see chart 4).


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Chart 4

• Growth in property development loans peaked in the third quarter of 2013. It has since moderated to close to 16%

in the first quarter of 2014, reflecting a slowing of developers' construction activity (see chart 5).


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Chart 5

• The growth rate of trust lending to the sector bottomed in late 2012 and continued to rise until its recent high of

about 50% (see chart 6).


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Chart 6

Bond Issuances Will Slow Somewhat

• We expect the bond market to remain open for rated Chinese developers with a good track record. But the pace of

issuance could be slower and costs could be higher partially due to softer property and capital markets. Bond

issuances have totaled more than US$10 billion so far in 2014, compared with more than US$20 billion in full-year

2013, a record year for bond issuances in the real estate development sector (see table 2).

Table 2

Coupon Rates Of Bond Issues In 2014 Versus Previous Issuances

2014 issuance Previous issuance

Company Amount (mil.) Tenor

Coupon rate

(%) Amount (mil.) Tenor

Coupon rate

(%)

Agile Property Holdings Ltd. US$500 5 8.375 US$700 Perpetual 8.25§

RMB2,000 3 6.5

China Aoyuan Property Group Ltd. US$300 5 11.25 US$100 4 13.875

Central China Real Estate Ltd. S$200 3 6.5 S$175 3 10.75

CIFI Holdings (Group) Company

Ltd.

US$200 5 8.875 US$225 5 12.25


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Table 2

Coupon Rates Of Bond Issues In 2014 Versus Previous Issuances (cont.)

China Overseas Grand Oceans

Group Ltd.

US$400 5 5.125 HK$2,200* 5 2

China Overseas Land & Investment

Ltd.

US$800 5 4.25 US$500 5 3.375

US$700 10 5.95 US$500 10 5.375

US$500 20 6.54

Country Garden Holdings Co. Ltd. US$550 5 7.875 US$750 10 7.5

US$250 5 7.5 US$750 8 7.25

China Resources Land Ltd. US$400 5 4.375 US$750 5 4.625

US$700 10 6

China South City Holdings Ltd. US$400 5 8.25 HK$975 5 6.5

RMB$1,000 5 7.5

Fantasia Holdings Group Co. Ltd. US$300 5 10.625 US$250 7 10.75

Franshion Properties (China) Ltd. US$500 5 5.75 USD$300 5 5.375

Gemdale Corp. RMB1,050 3 6.5 RMB2,000 5 5.625

Greenland Hong Kong Holdings Ltd. RMB1,500 4 5.5 US$700 3 4.75

Greentown China Holdings Ltd. US$500 Perpetual 9§ US$300 6 8

Kaisa Group Holdings Ltd. US$250 4 8.875 RMB1,800 3 6.875

US$400 5 9

KWG Property Holding Ltd. US$600 5 8.975 US$300 7 8.625

Longfor Properties Co. Ltd. RMB2,000 4 6.75 US$500 10 6.75

Poly Real Estate Group Co. Ltd. US$500 5 5.25 US$500 5 4.5

R&F Properties (HK) Co. Ltd. US$1,000 5 8.5 US$400 7 8.75

Shimao Property Holdings Ltd. US$600 7 8.125 US$800 7 6.625

Dalian Wanda Commercial

Properties Co. Ltd.

US$600 10 7.25 US$600 5 4.875

China Vanke Co. Ltd. US$400 5 4.5 US$800 5 2.625

Yanlord Land Group Ltd. SG$400 3 6.2 RMB2000 3 5.375

Yuzhou Properties Co. Ltd. US$300 5 8.625 US$300 5 8.75

RMB--Chinese renminbi. HK$--Hong Kong dollar. *Convertible bond. § Coupon rate before step-up. Source: Standard & Poor's.

• We believe the offshore bond market will remain open to developers with a stronger credit profile despite potential

fund outflow and the U.S. Federal Reserve's upcoming easing of its bond buyback program. Recent examples

include China Overseas Land & Investment Ltd.'s (COLI) US$2 billion and Country Garden Holdings Co. Ltd.'s

US$800 million notes issuances. But companies with a limited track record won't find it easy to issue offshore

bonds, as shown by the cancellation of a deal by Jingrui Property. Other recent issuers include Longfor Properties

Co. Ltd., China Resources Land Ltd. (CR Land), and China Vanke Co. Ltd.

• In general, the coupon rates on bonds issued by developers will be higher this year than their historical lows. But

rates will remain attractive compared with those on onshore borrowings, a mix of bank and trust loans. The

exceptions are a few 'B'-rated developers such as CIFI Holdings (Group) Co. Ltd. and China Aoyuan Property Group

Ltd., where the coupon rate improved meaningfully to reflect their longer track record.

• We believe refinancing risk should be manageable for bonds due 2014. Over the past quarter, Powerlong Real

Estate Holdings Ltd. and China Properties Group repaid their bonds on maturity. We believe Country Garden

should be able to refinance or use its cash balance to pay off its outstanding bonds, given its healthy sales and


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balance sheets. We expect the parent company of Shanghai Industrial Urban Development Group Ltd. to step in as

a lender of the last resort if the company exhausts other refinancing channels. We believe the refinancing risk will

heighten for weaker players including Renhe Commercial Holdings Ltd. and Glorious Property Holdings Ltd. in

2015 as their U.S.-dollar bonds come due (see table 3). The companies may face liquidity or default risk unless their

sales improve.

Table 3

Companies With Bonds Maturing By The End Of 2015

Amount (mil.) Coupon rate Maturity Bond type

SOHO China Ltd.* HK$2,357 3.75% July 2014 Convertible

Shanghai Industrial Urban Development Group Ltd. US$400 9.75% July 2014 Senior unsecured

Country Garden Holdings Co. Ltd. US$375 11.75% September 2014 Senior unsecured

Powerlong Real Estate Holdings Ltd. HK$1,000 13.8% September 2014 Senior unsecured

Evergrande Real Estate Group Ltd. US$750 13% January 2015 Senior unsecured

Fantasia Holdings Group Co. Ltd. US$120 14% May 2015 Senior unsecured

Renhe Commercial Holdings Co. Ltd. US$300 11.75% May 2015 Senior unsecured

Gemdale Corp. RMB1,200 9.15% July 2015 Offshore renminbi bonds (CNH)

Country Garden Holdings Co. Ltd. US$400 10.50% August 2015 Senior unsecured

Powerlong Real Estate Holdings Ltd. US$200 13.75% September 2015 Senior unsecured

Road King Infrastructure Ltd. US$350 9.50% September 2015 Senior unsecured

Glorious Property Holdings Ltd. US$300 13% October 2015 Offshore renminbi bonds (CNH)

Central China Real Estate Ltd.* US$300 12.25% October 2015 Senior unsecured

Kaisa Group Holdings Ltd. RMB1,500 8% December 2015 Convertible

Yuzhou Properties Co. Ltd. US$200 13.50% December 2015 Senior unsecured

*Redeemed early. RMB--Chinese renminbi. HK$--Hong Kong dollar. Source: Standard & Poor's.

Aggressive Land Acquisitions

• In our view, Chinese developers remain aggressive in pursuing debt-funded expansion. Despite good growth in

contracted sales, companies continue to spend a substantial proportion of the sales proceeds to acquire land. On

average, rated developers spent 38% of contracted sales proceeds to buy land from January to April this year (see

table 4). COLI, CR Land, Sunac China Holdings Ltd., Longfor, and Kaisa Group Holdings Ltd. have had a higher

appetite to replenish their land bank so far this year. Franshion Properties (China) Ltd. has been the most aggressive

in this regard. The company spent Chinese renminbi (RMB) 18.5 billion to buy land against sales of RMB3.4 billion

from January to April 2014. We expect Franshion to look for strategic or financial partners to fund a part of the

acquisitions.

Table 4

Land Acquisitions For Selected Rated Developers From January To April 2014

Contracted sales* Land acquisitions* Land acquisitions/contracted sales

(Bil. RMB)

China Vanke Co. Ltd. 67.0 9.7 14.41

Poly Real Estate Group Co. Ltd. 36.4 9.3 25.41

China Overseas Land & Investment Ltd. 36.3 19.4 53.52

Country Garden Holdings Co. Ltd. 41.1 9.7 23.51


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Table 4

Land Acquisitions For Selected Rated Developers From January To April 2014 (cont.)

Evergrande Real Estate Group Ltd. 44.4 11.0 24.75

China Resources Land Ltd. 13.7 10.9 79.54

Shimao Property Holdings Ltd. 18.0 4.3 23.89

Greentown China Holdings Ltd. 17.2 4.2 24.47

Sunac China Holdings Ltd. 14.3 11.9 83.48

Longfor Properties Co. Ltd. 12.6 8.5 67.13

Guangzhou R&F Properties Co. Ltd. 19.0 2.2 11.71

Agile Property Holdings Ltd. 13.2 1.3 9.85

Kaisa Groups Holdings Ltd. 6.2 7.4 118.60

KWG Property Holding Ltd. 6.9 4.6 66.17

CIFI Holdings (Group) Co. Ltd. 6.8 0.7 10.84

Franshion Properties (China) Ltd. 3.4 18.5 543.24

Central China Real Estate Ltd. 3.0 1.5 50.87

China Overseas Grand Ocean Group Ltd. 3.0 4.2 140.00

Yuzhou Properties Co. Ltd. 2.9 0.1 2.93

China SCE Property Holdings Ltd. 3.9 1.4 37.10

Fantasia Holdings Group Co. Ltd. 0.9 0.4 45.67

China Aoyuan Property Group Ltd. 2.6 0.6 23.85

Powerlong Real Estate Holdings Ltd. 2.0 0.8 40.20

Total 374.8 142.5 38.03

*Data for January to April 2014. RMB--Chinese renminbi. Source: Company announcements, China Real Estate Index System.

• In our view, some of the more aggressive developers are vulnerable to a sudden decline in the property market due

to their large land payment commitments, and sometimes high per unit costs for land acquisitions. Examples

include Evergrande Real Estate Group Ltd. and Sunac China Holdings Ltd.

• The high leverage of Chinese property developers could weaken their credit profile if sales performance deteriorates

substantially in 2014. The growth in debt outpaced that in cash for several rated developers in 2013 (see chart 7)

due to aggressive debt-funded expansion. This is despite strong sales bolstering developers' cash balances. Debt

grew more than 50% for several companies, including China Aoyuan, China Overseas Grand Oceans Group Ltd.

(COGO), China South City Holdings Ltd., CIFI, Dalian Wanda Commercial Properties Co. Ltd., Fantasia Holdings

Group Co. Ltd., and Guangzhou R&F Properties Co. Ltd. For Evergrande, total debt more than doubled during 2013.


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Chart 7

• We believe many rated developers may turn more cautious in land acquisition and scale back new construction if

market conditions turn out to be much weaker than last year. Such caution may help them to rein in the rapid

increase in leverage. We expect most rated developers to adopt a flexible investment strategy this year.

• The days of rapid price growth are behind us. We believe that margins will be further compressed for the sector as a

whole because construction and land costs have been rising. The government will continue to guide the market

toward a flat or at most moderate growth in selling prices over the next two to three years through building

subsidized housing and taxes. We would consider a developer's ability to maintain a 30% gross margin to be in line

with the market trend.

• However, profit margins on a recognized basis could improve slightly in 2014 and part of 2015 as companies book

contracted sales in 2013, which had a good margin because of higher ASP and low-cost land purchased in the past.

Profit margin on contracted sales in 2014 will be under significant pressure because of lower ASP and the high costs

of land purchased after 2013.

Implementation Of Policy Measures Remains Key To Sales Performance

• The Chinese real estate market remains highly reactive to the government's policy measures. No major policies

have been introduced in the past quarter. But the implementation of some restrictive measures has been less

stringent in selective markets.

• We believe the central government is more market-oriented than the previous administration and will avoid


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launching new administrative measures. But healthy economic growth and social stability remain the key focus. It's

unlikely that the government will let the property sector collapse without lending a helping hand, given the sector's

importance to several upstream and downstream industries and many local governments.

Chart 8

• Year-on-year growth in real estate investment has slowed and continues to trend down. This will affect other related

industries, such as steel and building materials, which are already burdened with excess capacity and high leverage.

A continued slowdown in the property sector will result in even gloomier prospects for these related sectors.

• The Chinese economy faces several challenges. Trade and production index showed a mixed trend. Slowing GDP

growth and a crackdown on bribery and corruption will keep consumption and retail demand under pressure. The

Chinese government may have few options but to boost overall investment, including curtailing the slowdown in

real estate investments.

• As long as owner-occupier demand remains healthy, control measures often create more problems than they

resolve. Pent-up demand builds up in a market that is sluggish for six to 12 months, and is released as soon as

temporary restrictions ease. The market then rebounds, continuing the cycle of volatility.

• Some local governments have tested and relaxed home purchase restrictions. This could release some pent-up

investment demand. But in many lower-tier cities, investment demand is limited. So it remains to be seen whether

these relaxations can help the market to recover.

• In addition, some local governments have set a limit on how much prices can go down to prevent markets from

collapsing. Although such steps show the government's determination to protect the property market against a deep


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downside, they could limit the pricing flexibility of some developers who heavily rely on deep price cuts to survive.

This, in turn, could make some small developers more vulnerable this year.

• The most effective way to support market sentiment will be some loosening of liquidity. The central bank

commented earlier this month that commercial banks should continue to support mortgages of owner-occupiers

when they buy their first property. However, whether or not banks will follow the direction remains to be seen.

• We believe the government's adoption of market-oriented policies will bear fruit in the long term. Increased land

supply and development of public housing would reduce demand pressure due to increasing urbanization.

• Redevelopment of old town centers will remain a government priority. We believe developers with experience for

these types of projects and good connection to local governments will likely benefit. Poly Real Estate Group Co.

Ltd., Kaisa, and a few others have good experience in this regard.

Appendix

Table 5

Rating List

Issuer Name Issuer Credit Rating (as of June 5, 2014) CreditWatch/Outlook

Agile Property Holdings Ltd. BB Stable

Central China Real Estate Ltd. BB- Stable

China Aoyuan Property Group Ltd. B Stable

China Overseas Grand Oceans Group Ltd. BBB- Stable

China Overseas Land & Investment Ltd. BBB+ Stable

China Properties Group Ltd. B- Stable

China Resources Land Ltd. BBB Positive

China SCE Property Holdings Ltd. B Stable

China South City Holdings Ltd. B+ Positive

China Vanke Co. Ltd. BBB+ Stable

CIFI Holdings (Group) Co. Ltd. B+ Stable

Coastal Greenland Ltd. B- Negative

Country Garden Holdings Co. Ltd. BB Positive

Dalian Wanda Commercial Properties Co. Ltd. BBB+ Stable

Evergrande Real Estate Group Ltd. BB- Negative

Famous Commercial Ltd. BB Stable

Fantasia Holdings Group Co. Ltd. BB- Negative

Franshion Properties (China) Ltd. BBB- Stable

Future Land Development Holdings Ltd. BB- Stable

Gemdale Corporation BB+ Stable

Glorious Property Holdings Ltd. B- Negative

Golden Wheel Tiandi Holdings Co. Ltd. B Stable

Greenland Holding Group Co. Ltd. BBB Stable

Greenland Hong Kong Holdings Ltd. BBB- Stable

Greentown China Holdings Ltd. BB- Stable

Guangzhou R&F Properties Co. Ltd. BB Stable

Hengli (Hong Kong) Real Estate Ltd. BBB Stable

Hopson Development Holdings Ltd. B- Stable


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Table 5

Rating List (cont.)

Kaisa Group Holdings Ltd. BB- Stable

KWG Property Holding Ltd. BB- Negative

Longfor Properties Co. Ltd. BB+ Stable

Mingfa Group (International) Co. Ltd. B Stable

Poly Real Estate Group Co. Ltd. BBB+ Stable

Powerlong Real Estate Holdings Ltd. B Stable

R&F Properties (HK) Co. Ltd. BB Stable

Renhe Commercial Holdings Co. Ltd. CCC Negative

Road King Infrastructure Ltd. BB- Stable

Shanghai Industrial Urban Development Group Ltd. BB Stable

Shimao Property Holdings Ltd. BB Stable

SOHO China Ltd. BB+ Stable

Sunac China Holdings Ltd. BB- Stable

Times Property Holdings Ltd. B+ Stable

Vanke Real Estate (Hong Kong) Co. Ltd. BBB+ Stable

Wanda Commercial Properties (Hong Kong) Co. Ltd. BBB Stable

Xinyuan Real Estate Co. Ltd. B+ Stable

Yanlord Land Group Ltd. BB- Stable

Yuexiu Real Estate Investment Trust BBB Stable

Yuzhou Properties Co. Ltd. B+ Stable

Zhong An Real Estate Ltd. B Negative


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Chart 9


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Chart 10

Table 6

Bond Issues For Companies Rated By Standard & Poor's (Year-To-Date)

Issuer Currency

Sale/Original amount

(mil.) Coupon (%)

Final maturity

date

Issue

rating

R&F Properties (HK) Co. Ltd. (Guangzhou

R&F)

US$ 1,000 8.5 1/10/2019 BB-

KWG Property Holding Ltd. US$ 600 8.975 1/14/2019 B+

China Aoyuan Property Group Ltd. US$ 300 11.25 1/17/2019 B-

Shimao Property Holdings Ltd. US$ 600 8.125 1/22/2021 BB-

China Overseas Grand Oceans Group Ltd. US$ 400 5.125 1/23/2019 BBB-

Fantasia Holdings Group Co. Ltd. US$ 300 10.625 1/23/2019 B+

Yuzhou Properties Co. Ltd. US$ 300 8.625 1/24/2019 B

CIFI Holdings (Group) Co. Ltd. US$ 200 8.875 1/27/2019 B

China South City Holdings Ltd. US$ 400 8.25 1/29/2019 B

Wanda Commercial Properties (Hong Kong)

Co. Ltd. (Dalian Wanda)

US$ 600 7.25 1/29/2024 BBB-

Agile Property Holdings Ltd. US$ 500 8.375 2/18/2019 BB-

Agile Property Holdings Ltd. RMB 2,000 6.5 2/28/2017 BB-

Famous Commercial Ltd. (Gemdale) RMB 1,050 6.5 3/4/2017 BB-

Times Property Holdings Ltd. US$ 305 12.625 3/21/2019 B


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Table 6

Bond Issues For Companies Rated By Standard & Poor's (Year-To-Date) (cont.)

Franshion Brilliant Ltd. (Franshion) US$ 500 5.75 3/19/2019 BBB-

Hengli (Hong Kong) Real Estate Ltd. (Poly) US$ 500 5.25 4/25/2019 BBB-

Yanlord Land Group Ltd. S$ 400 6.2 5/8/2017 BB-

Country Garden Holdings Co. Ltd. US$ 550 7.875 5/27/2019 BB

China Overseas Finance (Cayman) VI Ltd.

(COLI)

US$ 800 4.25 5/8/2019 BBB+


(COLI)

US$ 700 5.95 5/8/2024 BBB+

Central China Real Estate Ltd. S$ 200 6.5 5/26/2017 BB-

Country Garden Holdings Co. Ltd. US$ 250 7.5 5/27/2019 BB

Longfor Properties Co. Ltd. RMB 2,000 6.75 5/28/2018 BB

Kaisa Group Holdings Ltd. US$ 400 9 6/6/2019 BB-


(COLI)

US$ 500 6.45 6/11/2034 BBB+

Note: Company names in parenthesis refer to the parent of the issuing entity. RMB--Chinese renminbi. SG$--Singapore dollar.

Table 7

Rating Actions Over The Past Quarter

Ratings

Issuer To From Rating action Rating action date

Times Property Holdings Ltd. B+/Stable/-- Not rated New rating March 10, 2014

Fantasia Holdings Group Co. Ltd. BB-/Negative/-- BB-/Stable/-- Outlook revision April 23, 2014

Evergrande Real Estate Group Ltd. BB-/Negative/-- BB/Watch Neg/-- Downgrade April 29, 2014

China Resources Land Ltd. BBB/Positive/-- BBB/Stable/-- Outlook revision May 2, 2014

Kaisa Group Holdings Ltd. BB-/Stable/-- B+/Stable/-- Upgrade May 2, 2014

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