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Moody's affirms PT Bumi Serpong's rating, changes outlook to positive

Moody's Investors Service affirmed PT Bumi Serpong Damai Tbk's Ba3 corporate family rating and changed the rating outlook to positive from stable.

The positive outlook mirrored the agency's expectation that a rise in the Indonesian developer's recurring income and financial metrics over the following 12- to 18-month period could warrant a rating upgrade, Moody's Vice President and Senior Analyst Jacintha Poh said in a report.

The ratings agency anticipates that the company's recurring revenue will increase 25% to 30% year over year, owing to contributions from office towers, which it purchased in 2017, as well as newly completed investment properties.

The report also noted an adjusted debt/homebuilding EBITDA of about 2.5x and homebuilding EBIT/interest expense of 5.0x as credit metrics that will lead to an upgrade.

PT Bumi's current Ba3 rating takes into account its established position as one of the largest property developers in Indonesia, with operations across multiple property segments comprising residential, office, retail, industrial and hospitality, according to the report.