Fitch cuts, then lifts Lippo Malls

Fitch Ratings said it downgraded Lippo Malls Indonesia Retail Trust's long-term issuer default rating to RD, Restricted Default, from C, following the completion of a tender offer.

“This is because we consider the transaction to be a distressed debt exchange (DDE) as it results in a material reduction in terms, and in our view, was conducted to avoid a default,” the agency said in a press release.

Subsequently, Fitch said it raised LMIRT's issuer rating to CC to reflect its post-DDE prospects, which include the elevated potential of a debt restructuring or a further DDE. “This is because we believe the trust has limited options to repay the remaining $138.4 million of unsecured notes maturing on June 19, 2024, at par value.”

The agency said it also upgraded the rating on LMIRT's senior unsecured notes due 2024 and 2026 to CC from C with an RR4 recovery rating. LMIRT's wholly owned subsidiary, LMIRT Capital Pte. Ltd., issued the notes, which are guaranteed by Perpetual (Asia) Ltd. in its capacity as trustee of LMIRT.

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