Australia-based QIC Property Fund (QPF) is seeking to increase its target gearing (net debt to assets) range to 25%-35% from 10%-20%. 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 this proposal to its unitholders. If the fund alters the range as proposed, we would expect to lower the rating to 'A-'. The resolution of the CreditWatch will be dependent on the outcome of the unitholder vote scheduled over the coming months. The CreditWatch placement reflects our expectations that QPF's proposed higher target gearing range will weaken its prospective credit metrics and financial
