Renhe Credit Rating Cut by S&P as Developer May Face Cash Crunch

Renhe Commercial Holdings Co., a Chinese shopping mall builder, had its corporate credit rating cut by Standard & Poor’s, which said the developer may not have enough cash to pay its interest expenses in the next 12 months.

S&P lowered Renhe’s rating to CCC, which is eight steps below investment grade, from B- with a negative rating outlook, it said to an e-mailed statement today.

Renhe’s shares fell 3.6 percent to 40.5 Hong Kong cents at the market close today, bringing its loss to 13 percent since March 28, when it posted an 83 percent decline in 2012 profit.

“We expect the company’s property sales and receivables collection will likely remain low over the next sixth to 12 months,” S&P credit analyst Frank Lu said in today’s statement. “The negative outlook reflects our expectation that Renhe may miss its interest payment in the next 12 months.”

The estimated cash and income generated by Renhe in 2013 will likely be 20 percent to 30 percent short of meeting its financial commitment this year, the ratings company said in the statement.