Moody's: Road King notes B1

Moody's Investors Services said it assigned a B1 senior unsecured debt rating to the proposed dollar-denominated senior perpetual capital securities to be issued by RKI Overseas Finance 2017 (A) Ltd. and guaranteed by Road King Infrastructure Ltd. and some of its subsidiaries.

The outlook is stable.

The proceeds will be used for general corporate purposes, Moody's said.

Although the proposed dollar-denominated senior perpetual securities will increase Road King's debt level in 2017, the agency said it expects that debt leverage – as measured by revenue/adjusted debt – will remain appropriate for its B1 rating over the next 12 to 18 months because of the increased level of revenue recognition.

Road King's acceleration in debt growth is within expectations because the company needs to fund higher levels of land acquisitions and construction costs to support its growing scale, Moody's said.

The company has to address the funding needs of its development projects in Hong Kong, which have a longer cash collection cycle than those of its projects in China, the agency said.

But Moody's also said it expects Road King to recognize better revenue and profit over the next 12 to 18 months.

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