By Matt Grossman

Xinyuan Real Estate Co. has received a downgrade to its credit rating from Fitch Ratings after Xinyuan proposed to exchange $200 million of bonds set to mature next week.

Fitch downgraded Xinyuan's issuer default rating to C from CCC, lowering the rating further into junk-bond territory. It also cut the rating on Xinyuan's outstanding bonds to C.

Xinyuan had said it plans to offer to exchange $200 million of senior notes due next Friday for new senior notes due in 2023. Fitch would consider the offer a distressed debt exchange, prompting the rating downgrade, the firm said.

"Fitch considers the exchange offer to be necessary for Xinyuan to avoid default given tight liquidity," the rating firm said.

Chinese property companies have faced growing scrutiny over the past month as China Evergrande Group, a major developer, missed a bond payment in September and has moved closer to default.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

10-08-21 0719ET