S&P Global Ratings downgraded Longfor's (HKG:0960) long-term issuer credit rating to "BB" from "BB+" and its senior unsecured notes to "BB-" from "BB."
The downgrade comes as the debt watcher expects the developer's contracted sales to remain under pressures in 2025 to 2026 as saleable resources are depleted.
The developer's strategy of clearing its inventory could be a bane for its property development business' profit margins, which are seen to range between 5% and 6% during the period compared with 11% in 2023, S&P said.
Revenue in the unit is seen to plunge 14% in 2024 and 19% for 2025, the debt watcher said.
The outlook is negative as S&P believes contracted sales could plunge in the next 12 months amid a distressed property market.
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