"The downgrade also reflects the trust's weakening financial policy as demonstrated by its increasing proportion of floating-rate debt over the past three years, as well as the limited headroom under its regulatory leverage ratio to accommodate a decline in asset value," says Chua, who is also Moody's Lead Analyst for LMIRT.
On June 22, Moody's Investors Service announced that it downgraded Lippo Malls Indonesia Retail Trust's (LMIRT) corporate family rating to B2 from B1. Moody's has also downgraded the backed (guaranteed) senior unsecured rating on the bonds to B2 from B1. The outlook for all the ratings remains negative.
"The downgrade reflects our expectations that LMIRT's credit metrics will remain weak despite improving operating environment in Indonesia as restrictions ease. Rising interest rates also heighten risks that the trust's interest coverage will further weaken given its high proportion of floating-rate debt," says Rachel Chua, a Moody's Vice President and Senior Analyst.
