Fitch rates Alam Sutera notes B

Fitch Ratings said it assigned an expected B rating to PT Alam Sutera Realty Tbk.'s proposed dollar-denominated senior unsecured notes with a recovery rating of RR4.

The notes will be issued by the company's wholly owned subsidiary, Alam Synergy Pte Ltd. and be guaranteed by Alam Sutera and certain subsidiaries, the agency said.

The notes are rated at the same level as Alam Sutera's senior unsecured rating as they represent unconditional, unsecured and unsubordinated obligations of the company, Fitch said.

The notes also include a "permitted priority indebtedness" clause that allows the company to issue secured debt of up to 15% of total assets, the agency said.

Fitch said it does not believe this level of debt will impair Alam Sutera's senior unsecured creditors.

This is because the agency said it expects the overall secured debt to be less than 2.5x of prospective EBITDA in 2019.

Fitch said it believes Alam Sutera's financial profile will be unchanged and consistent with its ratings as the new notes will mainly be used to refinance its outstanding $235 million senior unsecured notes due in 2020. This issue will extend the maturity profile of the company's debt, allowing it more flexibility to manage cash flows, the agency noted.

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