American credit rating agency Fitch Ratings has published China-based carrier-neutral data centre operator Chindata Group Holdings Limited’s (NASDAQ: CD) long-term foreign- and local-currency issuer default ratings (IDR) and foreign-currency senior unsecured rating of ‘BBB-‘.
The outlook on the IDRs is “stable”, the agency said in Chindata’s first-ever credit rating report.
Fitch has also assigned a ‘BBB-‘ rating to the proposed US dollar senior unsecured notes to be issued by Chindata.
The proposed notes are rated in line with Chindata’s senior unsecured rating of ‘BBB-‘ as they will rank pari passu with its existing and future senior unsecured debt.
Chindata plans to use the issuance proceeds to refinance existing debt, build data centres in China and overseas, supplement working capital and invest in research and development.
“Chindata’s ratings reflect its position as one of the largest developers, owners and operators of hyperscale data centres with a strong presence in China and other Asian emerging markets,” the agency said.
It continued: “Chindata’s business risk profile is characterised by high entry barriers, given the strategic location of its data centres and mission-critical services it provides. Cash flow visibility is high because of the long-term lease contracts with strong counterparties.
“However, the business risk profile is affected by its smaller scale and shorter operating record than global rated peers. Chindata’s financial profile is solid, as we expect net debt/EBITDA of 2.9x-3.5x in the medium term, lower than that of US and EU-based data centre peers.”
Backed by private equity firm Bain Capital, Chindata first entered the Nasdaq stock exchange in October 2020 with US$540 million in raised capital and a market valuation of $4.9 billion after 40 million shares were sold for $13.50 each.
The company reached its highest share value in December at $27.47, however, common stock is today worth $11.5 per share, with the company evaluated at $4.19 billion.