Xinyuan Real Estate Co. Ltd.'s Proposed U.S. Dollar Senior Unsecured Notes Assigned 'B-' Rating

HONG KONG (S&P Global Ratings) April 3, 2019--S&P Global Ratings today 
assigned its 'B-' long-term issue rating to the U.S.-dollar-denominated senior 
unsecured notes proposed by Xinyuan Real Estate Co. Ltd. (B/Negative/--). The 
issue rating is subject to our review of the final issuance documentation.

In our opinion, the new issuance is slightly credit positive for Xinyuan, 
given the mild extension in its debt maturity. The company will use the 
proceeds to refinance certain existing offshore debt and for general corporate 
purposes. Xinyuan will purchase its outstanding offshore senior notes due 2019 
with the proceeds from this proposed issuance. 

We also expect the new issuance, together with the company's recent onshore 
bond issuance, to only moderately improve Xinyuan's liquidity position, given 
that the company's short-term debt accounted for close to 50% of its total 
debt at end-2018. That said, we believe further improvement in Xinyuan's 
liquidity hinges more on the smooth execution of its sales plan and 
disciplined land acquisitions this year, given its small sales scale and land 
reserve. Potential further weakening of the company's liquidity is reflected 
in our negative rating outlook. A ratio of liquidity sources over uses of less 
than 1.0x would indicate such weakness. We could also lower the rating if 
Xinyuan's EBITDA interest coverage falls below 1.5x. 

We rate the proposed notes one notch lower than the issuer credit rating on 
Xinyuan to reflect subordination risks because the notes will rank behind a 
material amount of priority debt in the company's capital structure. As of 
Dec. 31, 2018, Xinyuan's capital structure consists of Chinese renminbi (RMB) 
12 billion in secured debt and RMB4 billion in unsecured debt at the 
subsidiary level, altogether making up about 67% of total reported debt.

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