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Bond Market News
Lippo Karawaci Upgraded to B- by Fitch
October 17, 2024
Lippo Karawaci was upgraded by a notch to B- from CCC+ by Fitch. The rating agency also upgraded the 2025s and 2026s issued by Theta Capital Pte. to B-. The upgrade reflects Lippo Karawaci’s planned reduction in net debt by using the proceeds from the stake sale in Siloam International Hospitals (SILO) to address its dollar bond maturities. In September 2024, Lippo Karawaci sold an 18.57% stake in SILO for IDR 6.9tn ($440mn), reducing its ownership to 29.09% through a voluntary tender offer by Sight Investment. The company plans to allocate IDR 3.9tn ($250mn) of the proceeds to repay debt, including redeeming $130.8mn of its 2026s notes on 31 October 2024. The company plans to utilize IDR 3tn ($190mn) for working capital and project completions, which may enhance its liquidity. Fitch anticipates that Lippo’s leverage (net debt-to-property assets) will improve significantly, dropping from 65% in 2023 to around 25% in 2024, allowing for a potential new debt issuance. Earlier this month, Moody’s had upgraded the entity to B3 citing similar reasons.
Lippo’s 6.75% 2026s traded stable at 99.55, yielding 6.99%.
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