Fitch rates Newland notes BB

Fitch Ratings said it assigned a preliminary BB rating to Newland International Properties, Corp.'s senior secured notes. The final maturity of the notes is seven years, with a 31/2-year interest-only period.

Newland is developing the Trump Ocean Club International Hotel & Tower, a multi-use tower located on the Punta Pacifica Peninsula in Panama City, Panama. Proceeds from the $220 million of notes will be used to fund a construction escrow account, to fund a six-month debt service reserve account and to repay existing debt.

The agency said Newland's credit's strengths include presales amounting to 65% of total expected units, the development of Trump Ocean Club will be the singular focus of Newland and strict covenants are in place prohibiting dividends or cash releases to the developer, and a portion of bond proceeds will serve to fund a construction escrow account sized to cover the remainder of all remaining construction costs.

Construction risk represents one of the main risks in addition to the liquidity concerns that could arise if sales velocity decreases, Fitch added.

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