Moody’s cuts Modernland to B3

Moody’s Investors Service said it downgraded the corporate family rating of Modernland Realty Tbk. (PT) to B3 from B2.

Moody’s also downgraded the backed senior unsecured rating of the 2021 notes issued by JGC Ventures Pte. Ltd. and the 2024 notes issued by Modernland Overseas Pte. Ltd. to B3 from B2. Both JGC Ventures Pte. Ltd. and Modernland Overseas Pte. Ltd. are owned by Modernland. The notes are guaranteed by Modernland and most of its subsidiaries.

The outlook is changed to negative from stable.

“The downgrade reflects our expectation that a drop in demand for residential properties and industrial land caused by the coronavirus outbreak and slower economic growth will weaken Modernland’s earnings and credit metrics to levels no longer consistent with its B2 rating,” said Jacintha Poh, a Moody’s vice president and senior credit officer, in a press release.

“The negative outlook reflects Modernland’s increased refinancing risk, as the company will likely be reliant on external funding to address its 2021 maturity amid challenging market conditions for fund raising,” said Poh.

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