RPT-Fitch Rates China Overseas Land's USD Notes Final 'BBB+'
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June 25 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned China Overseas Land & Investment Ltd.'s (COLI; BBB+/Stable) USD250m retap of its 4.25% senior unsecured notes due 2019, USD250m retap of its 5.95% senior unsecured notes due 2024 and issuance of USD500m 6.45% senior unsecured notes due 2034 final ratings of 'BBB+'. The notes, which are issued by China Overseas Finance (Cayman) VI Limited, are unconditionally and irrevocably guaranteed by COLI.
The notes are rated at the same level as COLI's senior unsecured debt rating as they represent direct, unconditional, unsecured and unsubordinated obligations of the company.
The assignment of the final rating follows the receipt of documents conforming to information already received. The final rating is in line with the expected rating assigned on 3 June 2014.
KEY RATINGS DRIVERS
Leading Homebuilder: COLI has been one of the top homebuilders in China since it started operations in 1984. It has consistently generated high profit margins - EBITDA margin of 30% in 2013 - that reflect its premium prices and effective cost management. Its strong brand is supported by its nationwide presence and focus on first-time homebuyers and "upgraders" who seek better homes than their existing residences. COLI ranked among the top three largest home sellers in 10 major cities in 2013.
Slower Contracted Sales Growth: COLI expects contracted sales in 2014 of HKD140bn, unchanged from 2013, when its contracted sales rose 66%. This is due to the strong growth in the whole property market in 2013, resulting in a higher base of comparison. COLI's background as a construction company gives it valuable insight into construction costs, leading to higher-quality products and stronger pricing power. COLI will continue to use its brand reputation, and focus on first-time homebuyers and upgraders who demand better quality at affordable prices. We expect this strategy to help COLI to meet its 20% net profit growth target in 2014. Continuación...