OREANDA-NEWS. Fitch Ratings says that the ratings of Chinese homebuilder Greenland Holding Group Company Limited (Greenland; BBB-/Negative) are not affected by the reported missed payments by its 20.5%-owned associate Yunfeng Group Limited (Yunfeng) on its onshore debt instruments. This is because Yunfeng's debt is non-recourse to Greenland. Furthermore, if Greenland decides to assist Yunfeng - or is directed by its shareholders to do so - such assistance will not be sufficient to hurt its credit profile, since Yunfeng's net debt represented only 5.5% of Greenland's debt at end-June 2015.

Media reported in late February 2016 that Yunfeng had missed the coupon payment on a privately placed onshore debt instrument in early 2016, and failed to redeem another similar debt when Yunfeng's leverage ratio breached debt covenants and bondholders exercised their put option for immediate repayment. Fitch has been unable to verify the details of Yunfeng's alleged default.

Yunfeng, which operates in the energy industry, ceased to be a subsidiary of Greenland - the second-largest homebuilder in China by contracted sales - on 1 October 2015. This was after Greenland ended the equity custody agreement with Shanghai Greenland Assets Holding Co. Ltd (Greenland Assets), a 34% shareholder of Yunfeng. Both Greenland and Greenland Assets are ultimately owned by the Shanghai municipality.

Greenland, in an announcement on 1 March 2016, said that Yunfeng has been operating independently and that it has not provided any debt guarantee to Yunfeng. Nonetheless, Greenland said that, as one of the shareholders, it would assist Yunfeng to "properly handle the related matters", provided that it is compliant with relevant laws and regulations.