Moody's rates Lippo Karawaci notes B2

Moody's Investors Service said it assigned a provisional B2 foreign currency senior unsecured rating to Lippo Karawaci Finance BV's proposed $180 million note issuance, which is guaranteed by PT Lippo Karawaci Tbk. The outlook is positive, reflecting the positive outlook for Indonesia's sovereign rating.

At the same time, Moody's assigned a provisional B1 local currency corporate family rating to Lippo Karawaci Tbk with a stable outlook.

The agency said the ratings reflect key challenges faced by Lippo Karawaci, including a domestic market focus that leads to concentration risk and exposure to uncertainties associated with Indonesia, cyclicality and development risk, a relatively short history for the company's diversified business strategy, weak liquidity with heavy reliance on short-term debt and material increase in foreign currency exposure after proposed bond issuance.

At the same time, the ratings considers the core credit strengths of the company, including moderate business diversification and a stable source of recurring income, a long operating track record and established brand name in township development, huge land bank reserves and growth prospects and supply-demand dynamics that support medium-term growth for its key industry sectors, the agency said.

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