S&P: China Overseas 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 dollar-denominated senior unsecured notes by China Overseas Grand Oceans Finance II (Cayman) Ltd.

China Overseas Grand Oceans Group Ltd. will unconditionally and irrevocably guarantee the notes.

The proceeds will be used to repay or refinance the group's existing debt, finance new and existing projects and for general corporate purposes, S&P said.

The rating is equalized with the company's corporate credit rating because of an anticipation that the company's ratio of priority debt-to-total assets will likely remain well below the notch-down threshold of 20% for investment-grade companies, the agency said.

The ratings reflect the Chinese property developer's stand-alone credit profile of BB- and three-notch uplift from the strong ongoing operational and financial support from China Overseas Land & Investment Ltd., S&P said.

The rating also considers its early expansion into tier-3 cities. This allows the company to establish a leading market position with lower land costs in some cities, the agency said.

These strengths are partially offset by its aggressive growth appetite and largely untested profitability in lower-tier cities, given its short operating history, S&P said.

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