Fitch Ratings has affirmed the Long-Term Foreign-Currency Issuer Default Ratings (IDR) on Guangzhou R&F Properties Co. Ltd. and its subsidiary, R&F Properties (HK) Company Limited (RFHK), at 'RD' (Restricted Default).

It has also affirmed RFHK's senior unsecured rating and the rating on the RFHK-guaranteed notes issued by Easy Tactic Limited at 'C', with the Recovery Ratings of 'RR5'.

At the same time, Fitch has chosen to withdraw the ratings on Guangzhou R&F and RFHK for commercial reasons.

Key Rating Drivers

Loans Deemed to be in Default: Based on the auditor's report in the company's 2022 financial statements, CNY29 billion of Guangzhou R&F's bank and other borrowings were deemed to be in default or cross-default as of end-March 2023. We believe this is because loans from onshore banks and financial institutions have not been formally extended, even though the company does not expect the lenders to demand immediate repayment of the overdue loans.

Unsustainable Capital Structure: The group faces around CNY5 billion in capital-market debt maturities in 2023-2024, following a maturity extension in 2022. The extension has eased repayment pressure in the near term, but we believe the company's capital structure remains unsustainable in the absence of significantly stronger sales. We estimate that Guangzhou R&F will require CNY40 billion in contracted sales (2022: CNY33 billion, 5M23: CNY10.6 billion) to be free cash flow neutral, which could be challenging.

Weak Contracted Sales: Contracted sales declined by 52% yoy to CNY10.6 billion in 5M23 and monthly contracted sales have averaged at around CNY2 billion since July 2022, compared with around CNY10 billion in 2021. We believe a significant increase in sales is unlikely, given a weakened brand and limited ability to launch new projects for sale.

Further Asset Disposals: The company continues to seek to dispose assets to provide additional liquidity, and believes its hotel portfolio can attract investor interest. The company completed CNY4.9 billion of asset disposals in 2022, including the sale of a 50% stake in a development project in the UK for HKD2.7 billion, three hotels in Beijing, Fuzhou and Zhenjiang for CNY1.3 billion and other development projects.

Derivation Summary

The 'RD' rating reflects that the company remains in default on certain bank and other borrowings.


Sensitivities are not applicable, given the withdrawal of the ratings.

Best/Worst Case Rating Scenario

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit

Liquidity and Debt Structure

Tight Liquidity: The company had CNY2.2 billion of unrestricted cash as of end-2022, insufficient to cover CNY43.7 billion of short-term debt.

Issuer Profile

Founded in 1994, Guangzhou R&F is a property developer focusing on medium- and high-end property development. The company also engages in hotel development, commercial operations, property management and architectural and engineering design. RFHK is Guangzhou R&F's wholly owned offshore investment and financing platform.


The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Guangzhou R&F has an ESG Relevance Score of '4' for Management Strategy, reflecting persistently weak contracted sales and an unsustainable capital structure, despite a debt extension. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit

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