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S&P lowers outlook on Modernland Realty to negative

S&P Global Ratings lowered its outlook on PT Modernland Realty Tbk to negative from stable and affirmed its long-term issuer rating at B.

The rating agency said Aug. 22 that the lowered outlook reflects the potential of compressed interest-servicing capacity and reduced cash balance over the coming 12 months, barring a substantial pickup in land sales and operating performance.

The rating agency noted that there was a substantial shortfall in the Indonesian property company's operating cash flows in the first half, resulting in a decline in its cash balance to 313 billion Indonesian rupiah as of June 30 from 555 billion rupiah at 2018-end.

Ratings believes there is elevated risk for Modernland Realty to meet its projection of 390 billion rupiah in operating cash flows through the end of 2019.

Modernland Realty's long-term issuer rating of B reflects its limited operating scale, reliance on land sales, thin interest-servicing capability and declining cash balance, the rating agency said.

As of Aug. 22, US$1 was equivalent to 14,252 Indonesian rupiah.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found here.