Moody's downgrades Macrotech Developers to B3 with negative outlook

Moody's Investors Service on Friday downgraded the corporate family rating of Macrotech Developers Ltd (MDL) -- formerly known as Lodha Developers Limited -- to B3 from B2.

At the same time, Moody's downgraded the senior unsecured rating of US dollar-denominated bonds issued by Lodha Developers International Limited (LDIL) and guaranteed by MDL to B3 from B2.

The outlook on all the ratings above is negative. "The downgrade reflects heightened liquidity risk at MDL because of the company's lack of sufficient progress in refinancing its upcoming debt maturities," said Moody's Analyst Sweta Patodia.

MDL has a 250 million pounds construction loan with respect to Lincoln Square, one of its London projects, maturing in December 2019, 324 million dollars in bonds maturing in March 2020 (after the one million dollar buyback) and another 517 million pounds of construction loans maturing in March 2021.

"MDL's initial plan to refinance the 324 million dollars bonds through proceeds from equity stake sales in London projects is now uncertain while progress on commercial asset sales in India has also been slower than what Moody's had expected and remains subject to further delays," said Patodia in a statement.

MDL's credit profile is constrained by its weak liquidity position. The ratings also incorporate governance risks arising from the company's concentrated ownership structure and its aggressive financial policies. The negative outlook reflects the uncertainty over the refinancing of MDL's upcoming debt maturities.

MDL is the largest real estate developer in India by sales of residential apartments. The company is focused on residential developments in the Mumbai Metropolitan Region, with some projects in nearby Pune.