Jiangsu Zhongnan Construction Group Co., Ltd. (Surveillance Report)

Lianhe Ratings Global Limited (“Lianhe Global”) downgrades Jiangsu Zhongnan Construction Group Co., Ltd.’s global scale Long-term Issuer Credit Rating to ‘B’ from ‘BB’; On Rating Watch Negative.

The Issuer Rating downgrade to ‘B’ from ‘BB’ reflects Jiangsu Zhongnan Construction Group Co., Ltd.’s (000961.SZ) (“Zhongnan” or “the company”) deteriorating contracted sales, profitability and financial metrics, which are worse than our previous expectations. Also, Zhongnan’s weakened cash position and access to financing channels put pressure on its liquidity and financial flexibility. Zhongnan’s current liquidity position does not commensurate with the ‘BB’ rating category. We believe Zhongnan will face challenges to its contracted sales, liquidity and access to refinancing channels amid the challenging market conditions.

The RWN reflects the increasing refinancing risk of Zhongnan on its maturing USD notes, which could lead to further downgrade to the company’s ratings.