Global rating firm Moody's Investors Service has downgraded the corporate family rating (CFR) of Macrotech Developers (earlier known as Lodha) to Caa1, from B3. A rating of Caa1 is given to entities with high credit risk.
The earlier B3 rating was itself a downgrade, by Moody's this August, and indicating hightened credit risk. On Tuesday, Moody's also downgraded the backed senior unsecured rating of the dollar-denominated bonds issued by Lodha Developers International and guaranteed by Macrotech, to Caa1 from B3.
"The downgrade to Caa1 reflects continued uncertainty with respect to the refinancing of Macrotech's upcoming debt maturities," says Sweta Patodia, a Moody's analyst. "While the company has made some progress in its refinancing efforts, its measures to date do not completely alleviate the significant refinancing risks." She is also Moody's lead analyst for Macrotech. MDL now has in place an executed loan agreement for $155 million, secured against the unsold inventory at Lincoln Square, one of its London projects. However, drawdowns under this facility remain subject to receiving the practical completion certificate for all units at the property, expected by next month.
The management estimates that practical completion certificates have come for about 75 per cent of the units in the development, Moody's said.
Macrotech expects to secure another credit facility of around $195 mn against the unsold inventory at Grosvenor Square, its second London project. Documentation for this facility is in progress and likely to be completed over the next few weeks, it said. "These two facilities constitute the company's primary source to refinance the upcoming bonds. However, given that the facilities cannot be drawn down immediately, and remain subject to the fulfilment of certain conditions, liquidity risk remains elevated," says Moody's.
In addition, the company plans to set up a rupee-denominated facility, to be secured against the inventory at its Indian operations.