Fitch downgrades Agung Podomoro

Fitch Ratings said it downgraded PT Agung Podomoro Land Tbk.’s (APLN) long-term issuer default rating to C from CCC-. At the same time, Fitch placed the $300 million of notes due in 2024, issued by a wholly owned subsidiary and guaranteed by APLN, on rating watch negative.

“The downgrade follows disclosure made by APLN that its 58%-owned subsidiary, PT Sinar Menara Deli (SMD), has signed an indicative term sheet to extend the maturity of Rp 350 billion medium-term notes (MTNs) to Aug. 22, 2021, from the original due date on Aug. 26, 2020. Fitch regards the restructuring of SMD’s MTNs as a distressed debt exchange (DDE) under its criteria, because it is done to avoid a payment default and there is a material reduction in terms,” Fitch said in a press release.

SMD is a restricted subsidiary under APLN’s dollar notes documentation and as a result, Fitch said it downgraded the parent to C to reflect the likelihood of impending default.

“The rating on APLN’s U.S. dollar notes is unaffected by the DDE proposal at SMD, as the DDE at SMD has not yet triggered the cross-default clause under APLN’s U.S. dollar notes documentation. The rating has been placed on RWN to reflect the risk of a default under SMD’s MTNs, which could, therefore, lead to cross-acceleration of APLN’s U.S. dollar notes,” Fitch said.

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