Fitch lowers Lippo Karawaci

Fitch Ratings said it downgraded PT Lippo Karawaci Tbk.'s (LPKR) long-term foreign- and local-currency issuer default ratings to CCC+ from B-. The agency also lowered the ratings on LPKR's U.S. dollar notes due January 2025 and October 2026 to CCC+ from B- with an RR4 recovery rating.

Fitch simultaneously cut LPKR's national long-term rating to B+(idn) from BBB-(idn).

“The rating action reflects heightened refinancing risk on LPKR's $237 million unsecured notes due on Jan. 22, 2025. This follows LPKR's confirmation that it will prioritize the refinancing efforts of its Singapore-based affiliate Lippo Malls Indonesian Retail Trust (LMIRT, CCC-) for $250 million unsecured notes due in June 2024 by introducing the trust to LPKR's own banks,” the agency said in a press release.

“Fitch believes this will potentially weigh on banks' risk appetite for exposure to a single business group, and could weaken LPKR's own banking access and introduce material delays. This comes at a time when LPKR's own deleveraging has been slow, such that we expect free cash flow (FCF) to remain negative in the next few years, despite improvements,” the agency added.

The outlook is negative.

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