Fitch cuts Modernland Realty to C

Fitch Ratings said it downgraded PT Modernland Realty Tbk.’s rating to C from CCC-. At the same time, Fitch lowered the ratings on the $150 million of notes due in 2021 and the $240 million of notes due in 2024 issued by wholly owned subsidiaries, and guaranteed by Modernland, to C from CCC-, with a recovery rating of RR4 maintained.

The downgrade follows the announcement the company’s Rp 150 billion bond repayment due on July 7 is postponed until further notice with a bondholders’ meeting planned on July 14, Fitch said.

The company will then have 10 business days upon receiving written notice from the trustee to cure the non-payment.

“We believe that the company will use the cure period to negotiate a restructure of the Rp 150 billion bond. The non-payment of IDR bonds could lead to extensive debt restructuring because of cross-default clauses in the documentation for the company’s $150 million notes due 2021 and $240 million notes due 2024,” Fitch said in a press release.

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