Fitch cuts Lippo Karawaci, notes to B

Fitch Ratings said it downgraded PT Lippo Karawaci Tbk.'s long-term issuer default rating to B from B+ and its outstanding senior unsecured dollar-denominated notes to B/RR4 from B+/RR4.

At the same time, Fitch Ratings Indonesia downgraded Lippo's national long-term rating to BBB+(idn) from A+(idn).

All ratings were placed on rating watch negative.

Fitch said the downgrades reflect the quick cash burn at the standalone parent company, which has limited the company's liquidity.

“The cash burn rate is amplified when excluding subsidiary, PT Siloam International Hospitals Tbk, in light of Lippo's limited access to Siloam's cash flow,” the agency said in a news release.

“The exclusion of Siloam from our analysis is similar to our approach of excluding Lippo's 54%-held subsidiary, PT Lippo Cikarang Tbk (LPCK), following Lippo's divestment of a substantial stake in LPCK's key property project that could potentially generate annual presales of more than IDR10 trillion.”

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