Reuters: Financial Services and Real Estate: TEXT-S&P places Shimao Property Holdings 'BB' rtg on watch neg

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TEXT-S&P places Shimao Property Holdings 'BB' rtg on watch neg Mar 30th 2012, 09:05 Fri Mar 30, 2012 5:05am EDT -- A recovery of Shimao's financial strength is uncertain due to low visibility on the company's deleveraging efforts, in our view. -- We expect the capital structure of the China-based property developer to remain weak in 2012. -- We are placing our 'BB' long-term corporate credit rating on Shimao and the 'BB-' issue rating on the company's senior unsecured notes on CreditWatch with negative implications. On March 30, 2012, Standard & Poor's Ratings Services placed its 'BB' long-term corporate credit rating on Shimao Property Holdings Ltd. and the 'BB-' issue rating on the company's senior unsecured notes on CreditWatch with negative implications. We also placed our 'cnBB+' Greater China credit scale ratings on the China-based property developer and the 'cnBB' rating on its notes on CreditWatch with negative implications. We placed the ratings on Shimao on CreditWatch with negative implications because we believe the recovery of the company's financial strength is uncertain due to a low visibility on its deleveraging efforts. We expect Shimao's capital structure to remain weak in 2012, following a deterioration in 2011. As at the end of 2011, the company's leverage and cash flow coverage ratios had breached our downgrade triggers. Its ratio of adjusted debt to EBITDA was 5.5x and EBITDA interest coverage was 2.6x compared with our downgrade threshold of a maximum of 5.0x and at least 3.0x, respectively.

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