Fujian Yango Group Co. Ltd.'s Proposed Guaranteed U.S. Dollar Senior Unsecured Notes Assigned 'B-' Rating

HONG KONG (S&P Global Ratings) March 14, 2019--S&P Global Ratings today 
assigned its 'B-' long-term issue rating to the proposed 
U.S.-dollar-denominated senior unsecured notes by Yango (Cayman) Investment 
Ltd., a subsidiary of Fujian Yango Group Co. Ltd. (Fujian Yango).

Fujian Yango irrevocably and unconditionally guarantees the notes. The 
China-based property developer intends to use the net proceeds primarily to 
refinance its debt. The issue rating is subject to our review of the final 
issuance documentation.

We rate the proposed senior unsecured notes one notch below the issuer credit 
rating on Fujian Yango (B/Stable/--) to reflect substantial structural 
subordination risk. As of June 30, 2018, Fujian Yango's capital structure 
consists of Chinese renminbi (RMB) 83.9 billion in secured debt and RMB49.8 
billion in unsecured debt. As such, the secured debt ratio is about 63%, 
higher than our notching threshold of 50%. 

We believe Fujian Yango's stand-alone liquidity remains tight due to the 
company's weaker cash flows from non-property segments. However, liquidity on 
a consolidated basis is better due to the stronger performance of Fujian 
Yango's subsidiary Yango Group Co. Ltd. (Yango; B/Stable/--). 

We believe the proposed notes issuance will ease Fujian Yango's stand-alone 
short-term refinancing needs. We also expect the company to continue to be 
prudent in non-property acquisitions and control debt at its level. With 
Yango, a China-based property developer, being less aggressive in land 
acquisitions, we forecast Fujian Yango's consolidated debt-to-EBITDA ratio 
will moderately improve to 9.0x-11.0x in 2019, from 12.5x in 2017. This is 
reflected in the stable outlook on Fujian Yango.
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