Australia-based QIC Property Fund (QPF) is seeking to increase its target gearing (net debt to assets) range to 30%-40% from 10%-20% under a proposed restructure and liquidity plan. We believe the prospect of higher gearing will weaken the fund's credit metrics over time. We are therefore placing the 'A' issuer credit rating on QPF on CreditWatch with negative implications as the fund progresses with the proposal to its unitholders. If the fund elects to progress with the restructure and gearing change as proposed, we would expect to lower the rating by one to two notches. The resolution of the CreditWatch will depend on the outcome of the unitholder vote. The CreditWatch placement reflects our expectations that QPF's proposed higher target
