Bangkok--16 Apr--Moody's Investors Service Moody's Investors Service has a negative outlook for China's property-development sector as tighter credit conditions are likely to prevail over the next 12-18 months and, at the same time, business prospects have become much more challenging. "The overall sector has negative prospects in the near and medium term because developers face challenges in funding their capital expenditure with domestic and overseas funds, while also facing a more problematic sales environment," Moody's says in a new report. The report -- entitled Chinese Property Developers: Greater Risk from Tighter Liquidity and a More Volatile Market -- is authored by Peter Choy, a VP/Senior Credit Officer, and Kaven Tsang, an Assistant Vice President/Analyst. Moody's rates a total of 13 Chinese developers, of which 8 have stable outlooks, 2 negative and 3 are on review for possible downgrade. "Despite the risks, Moody's maintains a stable rating outlook for many individual rated developers," says Choy, adding, "Some still have cash available from bond and equity issuances in 2007, and Moody's has positioned ratings to withstand some underperformance against expectations. " "In addition, according to our scenario analysis, most rated developers can withstand tightened bank lending and a 25% fall in their projected sales for 2008," says Choy. "This situation, however, assumes they make no further acquisitions which eat into their existing balance-sheet liquidity." The wide-ranging report looks in detail at the sector's key rating issues-- tighter funding, regulatory intervention, increased supply, and rising interest rates -- but says that liquidity is currently its main focus. "In particular, our report has focused on issuers' liquidity and accordingly has implemented some stress tests on this issue," says Tsang, adding, "The results show, as indicated above, that many show some resilience to disappointing sales outcomes." Another threat to credit profiles comes from the possibility that larger developers may take advantage of a softening market to acquire weaker smaller entities, the report says. Such deals or expansions of land banks could place the liquidity and financial or asset profiles of acquirers at risk. At the same time, the report says prudent financial policies are necessary if ratings are to be maintained. "The current demanding business environment is testing the developers'ability to manage their rapid growth plans, and those that fail to maintain strict financial discipline and, in particular, disciplined liquidity profiles, risk downward pressure on their ratings," says Choy. Longer term, the opportunities in China's property sector remain favorable, the report says. The secular trends of a relatively low level of urbanization, high income growth, a high savings rate, and increasing demand for better living standards all provide support. The report can be found at www.moodys.com NOTE TO JOURNALISTS ONLY: For a copy of these reports, please contact EMEA Press Information in London +44-20-7772-5456; New York Press Information +1-212-553-0376; Juan Pablo Soriano in Madrid+34-91-310-1454; Alex Cataldo in Milan +39-02-914-81-100; Eric de Bodard in Paris +331-5330-1076; Detlef Scholz in Frankfurt +49-69-707-30-700; Mardig Haladjian in Limassol +357-25-586-586; Alex Sazhin in Moscow+7495-641-1881; Petr Vins in Prague +4202 2422 2929; Tokyo Press Information +813-5408-4110; Hilary Parkes in Toronto +1-416-214-1635; Hong Kong Press Information +852-2916-1150; Hector Lim in Sydney +612 9270 8102+612 9270 8102; Luiz Tess in Sใo Paulo +5511-3043-7300; Alberto Jones Tamayo in Mexico City +5255-1253-5700; Daniel R๚as in Buenos Aires +54 11-4816-2332 ext. 105; Craig Jamieson in Johannesburg +27-11-217-5470; Jehad el-Nakla in Dubai +971 4 365 0284; or visit ourweb site at www.moodys.com Hong Kong Kaven Tsang Asst Vice President - Analyst Corporate Finance Group Moody's Asia Pacific Ltd. JOURNALISTS: (852) 2916-1150 SUBSCRIBERS: (852) 3551-3077 Hong Kong Peter Choy VP - Senior Credit Officer Corporate Finance Group Moody's Asia Pacific Ltd. JOURNALISTS: (852) 2916-1150 SUBSCRIBERS: (852) 3551-3077