Publicly listed company, PT Agung Podomoro Land Tbk (IDX: APLN) plans to repay the company' debts amounting to S$172.8 million (US$128.95 million - Photo by the Company

JAKARTA (TheInsiderStories) – Publicly listed company, PT Agung Podomoro Land Tbk (IDX: APLN) plans to repay the company’ debts amounting to S$172.8 million (US$128.95 million, the management announced today. The loan facilities was obtained on Sept. 24, 2019.

To pay the debt, the developer has received a new loan from Guthrie Ventures Pte. Ltd., on Nov. 20. The facility also involves local lender, PT Bank CIMB Niaga Tbk (IDX: BNGA) and secured by a number of collaterals, like the company’ account and a first-rank mortgage of the Central Park shopping center flats.

Followed the debt restructuring program, recently, the international agency, Fitch, has raised the ratings of Agung Podomoro and US Dollar-denominated bond from C to CCC-. The rating lift also pinned to its subsidiary, APL Realty Holdings Pte. Ltd., notes worth of $300 million issued on June 2, 2017.

The developer has completed the debt restructuring of the other unit, PT Bali Perkasa Sukses, with 63 percent ownership. Based on the company data, total liabilities of the issuer recorded Rp19.54 trillion while the equity only Rp11.03 trillion.

Another rater, Moody’s Investor Services rated that the pandemic-led consumption shock will drive economic contraction and hurt demand across all segments of Indonesia’ property sector over the next six to 12 months. This will creating pressure on rated developers’ credit metrics, said the agency in their latest report.

“We expect weak retail sales will hurt occupancy and retail property rents, while oversupply continues to constrain earnings in the office segment and industrial land sales fall as companies reduce capital spending,” says Jacintha Poh from Moody’s in the latest report.

She continued, “The residential segment should perform relatively better, given developers’ willingness to cut prices and the potential easing of rules for foreign buyers. Demand will be the strongest for housing projects priced at IDR1 billion or lower.”

In this environment, marketing sales will broadly decline in 2020, with the aggregated marketing sales of Moody’s six rated developers falling 25 percent from 2019 figures. This slowdown in marketing sales, along with the revised accounting standard for revenue recognition, now based on handover instead of percentage of completion, will drive a decline in earnings, causing rated developers’ leverage and interest coverage to weaken in 2020 – 2021 from 2019 levels.

For most developers, liquidity will weaken over the next 12 months because of declines in operating cash flow and upcoming debt maturities. PT Alam Sutera Realty Tbk (IDX: ASRI) (Caa1 negative) and Agung Podomoro, both face a deterioration in operating cash-flow and are reliant on external funds to meet debt maturities in 2021, heightening the risk of default.

Then, PT Modernland Realty Tbk (IDX: MDLN)’ (Ca negative) cash flow has fallen to the extent that it is unable to meet interest payments on its US Dollar bond. It has initiated the restructuring of its American Dollar notes.

US$1: S$1.34

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