Moody's placed Lippo Malls Indonesia Retail Trust's Baa3 issuer rating on review for downgrade.
The rating agency's Vice President and Senior Analyst Jacintha Poh said the deteriorating credit quality of key entities within the Lippo group was accountable for the move. Units Lippo Karawaci Tbk PT and Matahari Putra Prima Tbk PT were downgraded in 2017, the report noted.
Poh projected that owing to the trust's aggressive acquisitions, its financial metrics will weaken, leaving it exposed to foreign exchange rate fluctuations and asset devaluations. With about 30% of Lippo Malls' total debt due in 2018, Moody's added that the company further faced high refinancing risk.
It expects the trusts' leverage to rise after the S$98.1 million purchase of Lippo Plaza Jogja and Kediri Town Square retail malls through debt financing by 2017-end.
As of Dec. 20, US$1 was equivalent to S$1.34.