Fitch Ratings has affirmed China-based homebuilder Country Garden Holdings Company Limited's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs), senior unsecured rating and the rating on the outstanding bonds at 'BB-'.

The Outlook on the Long-Term IDRs is Negative. We have simultaneously withdrawn the ratings.

The ratings reflect the Chinese property sector's continued poor capital-market conditions, limiting Country Garden's access to unsecured funding and affecting its financial flexibility. Country Garden's contracted sales may have stabilised in recent months and Fitch believes its available cash balance and internal cash generation should be sufficient to cover its medium-term capital-market debt maturities.

However, uncertainty remains over the sustainability of its sales, as well as the availability of its cash on hand. Fitch believes these risks are appropriately reflected at the current rating level. On the other hand, the ratings are supported by the company's strong market position, scale and diversification.

The Negative Outlook reflects Fitch's view that the sector's challenging operating and funding environment may persist, further dampening the company's financial flexibility.

The ratings have been withdrawn for commercial reasons.

Key Rating Drivers

For details on the key rating drivers, see 'Fitch Downgrades Country Garden to 'BB-'; Outlook Negative; Off RWN', published on 31 October 2022.

RATING SENSITIVITIES

Rating sensitivities are not applicable, as the ratings have been withdrawn.

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 https://www.fitchratings.com/site/re/10111579.

Issuer Profile

Country Garden is a leading homebuilder in China, with more than 3,200 projects across the country. It mainly focuses on third- and fourth-tier cities, but has recently shifted its land acquisitions towards higher-tier cities.

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.

ESG Considerations

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 www.fitchratings.com/esg

Following the withdrawal of the ratings, Fitch will no longer be providing the associated ESG Relevance Scores.

RATING ACTIONS

Entity / Debt

Rating

Prior

Country Garden Holdings Company Limited

LT IDR

BB-

Affirmed

BB-

LT IDR

WD

Withdrawn

BB-

LC LT IDR

BB-

Affirmed

BB-

LC LT IDR

WD

Withdrawn

BB-

senior unsecured

LT

BB-

Affirmed

BB-

senior unsecured

LT

WD

Withdrawn

BB-

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VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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