HONG KONG Tue Jan 20, 2015 2:39am EST
HONG KONG Jan 20 (Reuters) - China's Glorious Property had its credit rating cut by Standard & Poor's on Tuesday, the latest red flag to be raised about Chinese developers' ability to service their debt.
S&P cut the rating by a notch to CCC, saying it was concerned about the company's ability to refinance $300 million of bonds that are due to mature in October. The agency warned there could be a further downgrade for the troubled borrower closer to the bond's redemption date.
The bonds were down 3.5 cents at 67/71 cents on the dollar after the S&P move. The shares were flat at HK$0.77, just off the all-time low of HK$0.70 that they hit last week.
The move comes as investors grow increasingly concerned about whether Chinese property developers can meet all their credit obligations.
Earlier this month developer Kaisa Group Ltd failed to make an interest payment on one of its bonds, leaving it facing the prospect of becoming the first Chinese property firm to default on its offshore bonds.
S&P said Glorious's downgrade reflected elevated refinancing risks on its bond as the company was reporting weak sales and added there was lack of clarity about how the bond's redemption would be funded.
"At the moment there is no visibility and the company has not indicated to us how they propose to go ahead," Christopher Yip, the S&P analyst said.
The company also has a $400 million bond due in 2018 which was trading 1.5 cents down at 48/52 cents on the dollar. (Reporting by Umesh Desai; Editing by Rachel Armstrong)
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