Lodha Developers' proposed bond offering credit positive

Realty firm Lodha Developers proposed bond offering to refinance existing USD 200 million bonds with 2020 maturity is credit positive, but has no ratings impact, according to Moody's.
"Lodha Developers Pvt Ltd's announcement of a tap bond offering on its existing USD 200 million 12 per cent notes due 2020 by its wholly owned subsidiary Lodha Developers International Ltd is credit positive, but has no ratings impact," Moody's Investor Service said in a statement.
The bonds are unconditionally and irrevocably guaranteed by Lodha Developers Pvt Ltd (LDPL), it added.
The Mumbai-based Lodha Developers is one of the leading real estate firm in the country. It has projects in India as well as in London.

"The proposed offering will moderately extend LDPL's debt maturity profile, as it will use the proceeds to refinance existing short-term debt," says Saranga Ranasinghe, a Moody's Assistant Vice President and Analyst.
As on September 30, 2017, LDPL had around Rs 3,000 crore due in the next 12 months in India.

"The refinancing will also lower LDPL's interest costs -- due to the higher interest rates of the debt that is being refinanced," Ranasinghe said.
Similarly, rating agency Fitch also said that LDPL's proposed tap issue of its 12 per cent senior unsecured US dollar notes due in 2020 will lower its near-term onshore refinancing requirements.

"The company plans to use the proceeds to repay intra- group debt due from its London projects to its Indian operations. This will in turn repay its onshore bank debt," Fitch Ratings said.
The agency said the tap issue would not affect Lodha's 'B' Long-Term Issuer Default rating (IDR) with Stable Outlook or the 'B' long-term rating and 'RR4' Recovery Rating on its outstanding senior unsecured US dollar notes, issued by its arm Lodha Developers International and guaranteed by Lodha and certain subsidiaries.