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Bond Market News
Lippo Karawaci Upgraded to B3 by Moody’s
October 4, 2024
Lippo Karawaci was upgraded by a notch to B3 from Caa1 by Moody’s. The rating agency also upgraded the backed senior unsecured notes issued by Theta Capital to Caa1 from Caa2. The rating upgrade reflects Lippo Karawaci’s improved liquidity position following the developer’s recent disposal of an 18.57% stake in Siloam International Hospitals to CVC Capital Partners on 18 September 2024. Following the transaction, Lippo Karawaci maintains a 29.09% stake in Siloam International Hospitals. The company received proceeds of IDR 6.9tn ($450mn) of which it plans to use IDR 3.9tn ($250mn) to repay its borrowings and the balance to fund investments and for other general corporate purposes. According to Moody’s the majority of the IDR 3.9tn ($250mn) will be used to address its outstanding dollar bonds as there are no other material maturities over the next few years. On 30 September 2024, Lippo Karawaci announced a call option notice to redeem its 6.75% 2026s at par. Moody’s expects Lippo’s leverage to remain healthy at around 5.0x in 2025-26 and its interest coverage ratio to strengthen to 2.7x from 1.1x as of June 2024.
Lippo’s 8.125% 2025s traded stable at 100.838, yielding 5.1%.
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