Moody’s lowers Lippo Malls to Ba1

Moody's Investors Service said it downgraded Lippo Malls Indonesia Retail Trust’s (LMIRT) corporate family rating to Ba1 from Baa3.

Consequently, the agency withdrew the Baa3 issuer rating.

The outlook is negative.

The rating action concludes the review of the company's rating for downgrade, which was initiated on Dec. 21, and prompted by the deteriorating credit quality of key entities within the Lippo group that contribute around one-third of Lippo Malls’ total revenue.

"Our downgrade of LMIRT's rating was driven by a weakening of the trust's financial metrics and its significant exposure to the key entities within the Lippo group, whose credit quality are deteriorating," Moody's vice president and senior analyst Jacintha Poh said in a news release.

As of Dec. 31, the company’s adjusted debt/total deposited assets increased to 41%; a result, which exceeded Moody's downward rating threshold of 40%, because of the trust's aggressive debt-funded acquisitions and the weaker Indonesian rupiah against the Singapore dollar.

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