Fitch Ratings (
All the ratings remain on Rating Watch Negative (RWN). The debentures are guaranteed by
The downgrade follows the
Key Rating Drivers
The ratings on RLT's guaranteed debentures reflect the credit enhancement provided to investors by the full, unconditional and irrevocable guarantee by the parent, CGH. The guarantee ranks at least pari passu with CGH's unsecured and unsubordinated obligations.
The downgrade of CGH's ratings reflects a weakening in the company's financial flexibility due to challenges in
The RWN on CGH reflects Fitch's view that the cash flow pressure may persist because a sustained stabilisation in sales remains uncertain. Fitch is also monitoring CGH's progress in securing additional onshore capital-market financing.
CGH's ratings are supported by its strong market position, scale and diversification. Fitch believes the company's liquidity is adequate as it continues to have some access to various funding channels. CGH's recent maturities are covered by capital market issues and the use of balance sheet cash.
Derivation Summary
The ratings on RLT's guaranteed debentures are based entirely on the credit profile of the guarantor, CGH, a leading homebuilder in
CGH's large operating scale and market position are comparable with that of
CGH has a significantly larger operating scale and stronger market position than
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The RWN will be resolved once the RWN on CGH's Long-Term IDR is resolved.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of CGH's Long-Term IDR.
Negative action on CGH's Long-Term IDR could result in a multiple-notch downgrade to the National Long-Term Rating on RLT's guaranteed debentures. For CGH's rating, the following sensitivities were outlined by Fitch in our Rating Action Commentary on
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The RWN will be removed if the negative triggers are not met.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Persistent drain on working capital;
No stabilisation in contracted sales or cash collection;
No meaningful new issuance of domestic capital market debt.
Liquidity and Debt Structure
Guarantor's Liquidity Is Adequate: The rating on RLT's guaranteed debentures is based solely on the credit profile of the guarantor, CGH. CGH had
Available cash was lower than short-term debt of
Issuer Profile
RLT is 100% indirectly owned by CGH, a leading homebuilder in
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
The rating on the debentures is based entirely on the rating of the guarantor, CGH.
RATING ACTIONS
Entity / Debt
Rating
Prior
senior unsecured
Natl LT
A(tha)
Downgrade
AA(tha)
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
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