Moody’s downgrades Lippo Karawaci

Moody's Investors Service said it downgraded Lippo Karawaci Tbk.’s corporate family rating to B2 from B1.

At the same time, the agency downgraded the backed senior unsecured rating of the bonds issued by Theta Capital Pte. Ltd., a wholly owned subsidiary of Lippo Karawaci, to B2 from B1. The bonds are guaranteed by Lippo Karawaci and some of its subsidiaries.

The outlook is negative. This concludes the review that was initiated on April 11, after Lippo Karawaci's delay in reporting its financial reporting and its failure to fulfill certain reporting obligations under the indentures of its dollar-denominated notes.

On April 17, the company filed its 2017 audited consolidated financial results with the Indonesian stock exchange. It then subsequently submitted the certificate – as required under the indenture of its dollar-denominated bonds – stating details on and the computation of its fixed charge coverage ratio with respect to the four most recent quarters to the bond trustee.

"The downgrade reflects weaker-than-expected operating cash flow coverage for interest payments at the holding company level and a shift in Lippo Karawaci's business mix over the next 12-18 months, such that its operating cash flows will be reliant on asset sales that are subject to delays and market conditions," Moody's vice president and senior analyst Jacintha Poh said in a news release.

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