Fitch lowers Lippo Malls Indonesia

Fitch Ratings said it downgraded Lippo Malls Indonesia Retail Trust's long-term issuer default rating and the rating on its senior unsecured notes due 2024 and 2026 to B- from B. The debt recovery rating remains RR4. The notes were issued by its wholly owned subsidiary, LMIRT Capital Pte. Ltd., and are guaranteed by Perpetual (Asia) Ltd., in its capacity as trustee of LMIRT. The outlook is negative.

The downgrade and negative outlook reflect rising refinancing risk. Two-thirds of LMIRT's debt, including $250 million of senior unsecured notes, will mature in the next 18-20 months, for which the trust will need external financing. LMIRT has demonstrated its ability to tap banks and capital markets even during the height of Covid-19 pandemic, but execution risks have increased significantly as capital-market conditions have turned unfavorable,” Fitch said in a press release.

Additionally, LMIRT has a S$135 million bank loan due in November 2023 and a S$82.5 million bank loans due in January 2024. The agency said it expects the loan due in November to be refinanced within the next six months, though it sees refinancing the 2024 notes as being riskier given market conditions.

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