Moody's may upgrade Lippo Karawaci bonds

Moody's Investors Service said it confirmed Indonesia-based PT Lippo Karawaci Tbk.'s provisional B1 local-currency corporate family rating following the company's announcement that it has entered into an agreement to sell its entire interest in the property development project at Kim Seng Road, Singapore, which the company acquired for around Rp 2 trillion in mid April. The outlook is stable.

At the same time, Moody's placed the provisional B2 foreign-currency senior unsecured bond rating of Lippo Karawaci Finance BV on review for possible upgrade in light of the review for possible upgrade of Indonesia's sovereign rating.

Moody's said the ratings continue to reflect Lippo Karawaci's key challenges: concentration risk, exposure to the uncertainties associated with Indonesia, cyclicality and development risk, the relatively short history of its diversified business strategy, modest liquidity and the material exposure to foreign currency risk after the bond issuance.

At the same time, the ratings are supported by the company's moderate business diversification, its long operating track record and established brand name in township development, its huge land bank reserves and the favorable growth prospects and supply-demand dynamics in its key industry sectors, the agency said.

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