S&P rates Alam Sutera notes B

S&P said it assigned a B long-term issue rating to a proposed issuance of up to $315 million senior unsecured notes unconditionally and irrevocably guaranteed by PT Alam Sutera Realty Tbk. (ASRI).

ASRI's special purpose vehicle, Alam Synergy Pte. Ltd., will issue the notes.

The transaction extends ASRI's debt maturity profile, S&P said.

The proceeds will go toward refinancing up to 70% of existing $235 million notes maturing in 2020.

The remaining amount will go toward land acquisition at North Serpong and for general corporate purposes, the agency said.

Based on ASRI's net increase of up to $150 million of debt, S&P said it believes the company's leverage and EBITDA interest coverage ratios are still commensurate with a B issuer credit rating level.

ASRI has outstanding cash receipts from property sales in the last two years, as well as ongoing land sales agreement with China Fortune Land Development, the agency said.

S&P said it forecasts ASRI's EBITDA interest coverage after the issuance to remain at 2.1x to 2.3x over the next two years, compared with about 2.5x as previously expected.

The rating reflects the company's project concentration risk, dependency on land sales with China Fortune Land and its cyclical earnings from property development, the agency said.

The company's significant low-cost land bank and well-established brand name in township development in western Jakarta temper these weaknesses, S&P said.

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