Fitch upgrades Modernland

Fitch Ratings said it upgraded PT Modernland Realty Tbk.'s long-term issuer default rating to CCC- from RD, following the completion of its U.S.-dollar notes restructuring.

The agency also raised to CCC- from C Modernland’s restructured $179 million of notes due 2025 and $268 million of notes due 2027, which were issued by its wholly owned subsidiaries, JGC Ventures Pte. Ltd. and Modernland Overseas Pte. Ltd., respectively. The recovery rating on the notes remains at RR4. The notes, which are guaranteed by Modernland and certain subsidiaries, are rated at the same level as Modernland’s IDR as they constitute its direct and unsubordinated obligation, the agency said.

“The upgrade follows the completion of a debt restructuring plan, which effectively includes an interest payment holiday in the first 12 months and has improved MDLN's liquidity. MDLN's rating reflects an unsustainable capital structure, which is likely to require asset sales to reduce debt, and insufficient internal cash flow generation. MDLN's next significant liquidity event is its $160 million asset sale, to be completed by end-2024. However, its cash balance will start to deplete rapidly after 2023 due to the step-up in the cash coupon on its U.S.-dollar notes unless MDLN can improve presales significantly,” Fitch said in a press release.

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