Moody's lowers Lippo Malls

Moody's Investors Service said it lowered the corporate family rating of Lippo Malls Indonesia Retail Trust (LMIRT) to Caa1 from B3. The agency also downgraded the backed senior unsecured rating on the bonds issued by LMIRT Capital Pte. Ltd., a wholly owned subsidiary of LMIRT, to Caa1 from B3. LMIRT’s trustee guarantees the bonds.

"The downgrade reflects our view that debt restructuring is likely to take place over the next 6 -12 months as the trust has no concrete refinancing plans for its bank loan maturities due November 2023 and January 2024, as well as its US dollar bond that will mature in June 2024 amid a tight funding environment," said Rachel Chua, a Moody's vice president and senior analyst, in a statement.

"The downgrade also captures our expectation that LMIRT will trip its bank loan covenants and trigger a cross default on its US dollar bonds in the event of a depreciation of the Indonesian rupiah against the Singapore dollar which will result in its regulatory leverage exceeding 45%," said Chua, who is also Moody's lead analyst for LMIRT.

The outlook negative.

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