Fitch Ratings has downgraded Indonesia-based developer Agung Podomoro Land (APLN) Long-Term Issuer Default Rating (IDR) to ‘C’ from ‘CCC-‘. At the same time, the US$300 million notes due in 2024, issued by a wholly owned subsidiary and guaranteed by company, have been placed on Rating Watch Negative (RWN).
The downgrade follows disclosure made by the company that its 58%-owned subsidiary, PT Sinar Menara Deli, has signed an indicative term sheet to extend maturity of Rp350 billion ($24.14 million) medium-term notes (MTNs) to August 26, 2021 from the original due date on August 26, 2020.
Fitch regards the restructuring of the unit’ MTNs as a distressed debt exchange (DDE) under its criteria, because its done to avoid a payment default and there is material reduction in terms. Sinar Menara is a restricted subsidiary under Agung Podomoro‘ US Dollar notes documentation and therefore APLN’ IDR has been downgraded to ‘C’ to reflect the likelihood of impending default.
