Road King Infrastructure Ltd.'s Proposed Guaranteed U.S. Dollar Senior Unsecured Notes Assigned 'BB-' Rating


HONG KONG (S&P Global Ratings) Jan. 9, 2019— S&P Global Ratings today assigned 
its 'BB-' long-term issue rating to the U.S.-dollar-denominated senior 
unsecured notes that RKPF Overseas 2019 (B) Ltd. proposes to issue. Road King 
Infrastructure Ltd. (BB-/Stable/--) guarantees the notes. The China-focused 
developer with a toll-road portfolio will use the proceeds to refinance its 
existing debt. The issue rating is subject to our review of the final issuance 
documentation.

We rate RKI's guaranteed senior unsecured notes the same as the issuer credit 
rating, given limited subordination risk in the company's capital structure. 
As of Dec. 31, 2017, RKI's capital structure consisted of Hong Kong dollar 
(HK$) 6.9 billion in secured debt, HK$15.0 billion in unsecured debt at the 
parent level, and HK$5.9 billion unsecured debt issued or guaranteed by the 
company's operating subsidiaries. We consider the company's priority debt 
ratio to be below 50%. 

RKI will use the net proceeds to purchase part of its US$450 million 
guaranteed senior unsecured notes due August 2019 by tender. The company has 
another Chinese renminbi (RMB) 1.5 billion in domestic corporate bonds 
maturing in the second half of 2019. We expect RKI to maintain prudent 
financial management and keep leverage largely stable, with the ratio of debt 
to EBITDA at 4.3x-4.6x in 2018 and 2019, up slightly from 4.2x in 2017.

RKI's contracted sales rose to RMB32.1 billion in 2018, 31% higher than the 
same period in 2017. This exceeded our base-case projection, due to strong 
growth in the second half. However, RKI's market position in China property 
development remains weak compared with other similar rated peers', owning to 
the company's small scale, weak brand recognition, and geographical 
concentration in the Yangtze River Delta. 

The stable outlook on the issuer credit rating on RKI reflects our expectation 
that the company will moderately increase its property sales over the next 12 
months. We also anticipate that the company will maintain its strong profit 
margin over this period due to its steady execution of property development 
and stable income from its toll-road business.
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