Fitch: Modernland to negative

Fitch Ratings said it revised PT Modernland Realty Tbk.’s outlook to negative from stable.

The agency also said it affirmed the company’s long-term issuer default rating at B.

The negative outlook reflects the risk that Modernland could breach a number of its local-currency debt covenants in 2017 as EBITDA may remain weak unless presales improve in the next six to 12 months, Fitch said.

Modernland may not be able to achieve its presales target for 2016 due to the slow domestic macroeconomic environment, the agency said, and its dependence on cyclical industrial land sales.

The company also could take measures to improve the recognition of EBITDA or alternatively obtain waivers on covenant breaches, Fitch added.

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