Fitch lowers Lippo Malls

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

“The downgrade follows LMIRT's announcement that it will proceed with a tender offer, subject to the satisfaction of the conditions in the offering memorandum. We believe the tender offer constitutes a distressed debt exchange (DDE), as the transaction will lead to a material reduction in terms and, in our view, is being conducted to avoid a default,” Fitch said in a press release.

On Thursday, LMIRT reported that it received valid tenders and will buy $49.9 million of the notes due 2024 (26.5% of outstanding notes) and $28.4 million of the notes due 2026 (19.9% of outstanding notes).

Fitch said it plans to downgrade LMIRT to RD, restricted default once the tender is completed and will then reassess the ratings.

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