S&P rates Vanke Real Estate notes BBB

Standard & Poor's said it assigned a BBB long-term issue rating and cnA long-term Greater China regional scale rating to a proposed issue of renminbi-denominated senior unsecured notes by Bestgain Real Estate Lyra Ltd., a special purpose vehicle that Vanke Real Estate (Hong Kong) Co. Ltd. wholly owns.

The proposed notes will be a drawdown under the $2 billion medium-term notes program guaranteed by Vanke Real Estate.

Vanke Real Estate is considered a core subsidiary of China Vanke Co. Ltd. because S&P said it believes the two entities are strategically, financially and operationally integrated.

Therefore, the agency said it equalizes the ratings on the two companies. China Vanke will use the proceeds for general corporate purposes.

The issue rating is one notch lower than the long-term corporate credit rating on Vanke Real Estate to reflect the uncertainty over the timing of financial support, given China's controls over foreign exchange and capital, the agency said, and uncertainty relating to regulatory approval for equity interest purchase.

S&P said it estimates that an equity interest purchase undertaking between Vanke (Hong Kong) and China Vanke could take up to three months to complete.

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