S&P downgrades Lippo Karawaci

S&P said it lowered the long-term corporate credit rating on PT Lippo Karawaci Tbk. to B+ from BB-.

The agency also said it lowered the rating to B+ from BB- for all of the outstanding senior unsecured notes issued by Theta Capital Pte. Ltd.

Lippo guarantees the notes.

S&P also said it affirmed Lippo’s axBB Asean regional scale rating.

The outlook is stable.

The downgrades reflect an expectation that Lippo’s leverage will stay high and its interest-servicing capacity will remain thin in 2016 amid soft property sales and delayed asset sales, the agency said.

Lippo’s cash flow adequacy and interest-servicing capacity also are unlikely to recover in line with earlier expectations for a BB- rating in 2017, S&P added.

But the company’s competitive advantage will remain intact as it is one of the largest real estate developers in Indonesia, the agency said.

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