OREANDA-NEWS. Ratings on Chinese homebuilder Country Garden Holdings Co. Ltd. (Country Garden; BB+/Positive) and its US dollar senior notes due 2019, 2020, 2021 and 2023 will not be affected - even if the proposed amendments in a consent solicitation announced on 2 December 2015 are adopted, says Fitch Ratings.

The proposed amendments will loosen the existing indentures on the notes. If adopted, Fitch expects Country Garden to have greater investment and financial flexibility to expand into other segments which can be either related or unrelated to the homebuilding sector; more of a buffer against volatility in the housing markets; improve flexibility in its hedging strategy; and increase flexibility to rearrange its business strategy or corporate structure.

The purpose of the consent solicitation is to make the indenture of the 2019, 2020, 2023 US dollar senior notes conform to the terms of the US dollar senior notes due 2020.

Major proposed amendments of the indenture include: Lowering the fixed-charge coverage ratio requirement to not less than 2.75-1.00x from not less than 3.00x-1.00x; for the Permitted Investment basket: increasing the size of the Permitted Investment "basket" to 30% of total assets from 20%; permitting such investments in an investee whose other shareholder is an affiliate so long as the investment complies with the "Limitation on Transactions with Shareholders and Affiliates" covenant; and carving out investments in unrestricted subsidiaries that are not primarily engaged in the residential property business in China from counting against the Permitted Investment basket.

Other amendments are: removal of the definition of Permitted Business; including carve-outs under the "Limitation on Transactions with Shareholders and Affiliates" covenant in connection with restructuring to facilitate a potential spin-off listing of subsidiaries and transactions with such proposed spin-off group, subject to certain conditions; and amendment of the conditions for hedging obligations.