S&P Global Ratings affirmed PT Alam Sutera Realty Tbk's B long-term corporate credit rating, with a stable outlook, despite the company's breach of its restricted payment covenants with a recent dividend disbursement.
Additionally, S&P affirmed its B long-term issue ratings on the senior unsecured notes issued by Alam Synergy Pte. Ltd., which were guaranteed by Alam Sutera.
The company mistakenly disbursed 29 billion Indonesian rupiah of dividends in July, triggering the restricted payment covenant breach, despite failing to meet the fixed charge coverage ratio of at least 2.5x for the 12-month period ended June 30.
The rating agency believes that Alam Sutera can quickly resolve the technical breach and its bondholders will not call an event of default. It also anticipates the company will obtain bondholders' approval for waiver of the breach.
Meanwhile, the stable outlook, among other things, reflects the company's ability to maintain marketing sales and a disciplined capital expenditure over the next 12-18 months. S&P also expects Alam Sutera to manage its liquidity by selling properties or by reducing capital expenditure, subject to market conditions.
As of Oct. 10, US$1 was equivalent to 13,513.00 Indonesian rupiah.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.