Moody’s: Vanke Real Estate assumed notes Baa2

Moody's Investors Service said it assigned a provisional Baa2 senior unsecured rating to the $3.2 billion medium-term note program of Vanke Real Estate (Hong Kong) Co. Ltd.

The program and all of the notes issued under the program will remain supported by a deed of equity interest purchase undertaking and a keepwell deed between China Vanke Co., Ltd., Vanke Real Estate (Hong Kong) and the bond trustee, Moody’s said.

The outlook is negative.

The agency also said it withdrew the provisional Baa2 senior unsecured rating previously assigned to Bestgain Real Estate Lyra Ltd.'s medium-term note program, which was guaranteed by Vanke Real Estate (Hong Kong).

The securities issued under the program by Bestgain Real Estate are now being assumed by Vanke Real Estate (Hong Kong) and the ratings are unchanged. Those securities include a RMB 1 billion notes issue due 2018, $400 million notes issue due 2019, HK$3.65 billion notes issue due 2019, $220 million notes issue due 2021 and $600 million notes issue due 2019.

The rating on the program and Baa2 rating on the notes reflect Vanke Real Estate (Hong Kong) 's standalone credit strength and a three-notch uplift based on an expectation of financial support from China Vanke in the event of financial distress, Moody’s explained.

Vanke Real Estate (Hong Kong)'s standalone credit profile reflects the mid-sized scale of its operations in mainland China and its fairly diversified geographic coverage, both comparable to Ba-rated Chinese property development peers, the agency said.

The ratings also consider the operational and financial benefits arising from its close linkages to parent China Vanke, including the parent's brand, execution and management expertise and diversified sales network with good access to funding, Moody’s said.

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