Jakarta (TheInsiderStories) – PT Alam Sutera Realty Tbk (IDX: ASRI) planned to release global bond worth of US$175 million with a five years tenor next year, said the top management on Tuesday (08/20). The company aimed to use the proceed to redeem loan with the same amount in April 2020, earlier from its maturing period in April 2021.
Joseph Sanusi Tjong, the president director, in January 2019, the property developer through its subsidiary based in Singapore, Alam Synergy Pte. Ltd., issued global bonds $175 million. The bonds was guaranteed with the company shares pledge to Carlisle Venture Pte. Ltd.
He revealed that the global bond was issued at not ideal time. At that time, Alam Sutera could not be refinancing and had to issue bonds with shorter duration of two and three years. He stated, “The coupon was so high with unstable Rupiah exchange rate.”
Tjiong stated, there is a potential for a call option or to buy back on Jan. 22, 2019. The bonds have coupon interest 11.5 percent and mature in March 2021.
Recently, Moodys Investors Service has give rating B2 to the corporate family rating of Alam Sutera. At the same time, Moody’s affirmed the B2 backed senior unsecured rating of the 2020 notes, 2021 notes and 2022 notes issued by Alam Synergy Pte. Ltd., a wholly owned subsidiary of the company.
“The rating affirmation reflects Alam Sutera’ healthy core marketing sales in 1Q 2019 and our expectation that the company’s refinancing risk over the next 12 months will be addressed by its proposed tap bond issuance,” says Jacintha Poh, a Moody’s Vice President and Senior Credit Officer.
She added, the outlook on Alam Sutera remains negative to reflect uncertainties over the company’s future land sales to China Fortune Land Development Co., Ltd (CFLD) because the latter is late on its payment of around Rp500 billion for the land that it purchased in 2018,” adds Poh, who is also Moody’s Lead Analyst for Alam Sutera.
CFLD has an investment commitment for two main projects for residential and industrial development since 2016 with a value of Rp 19 trillion (US$1.36 billion). The developers based in Singapore are working on two property projects on the outskirts of Jakarta and Tangerang.
CFLD bough 60 hectares of land from the publicly listed company with costs around $150 million. The developer built 2,800 housing units labeled Lavon Swan City.
For the first quarter of 2019, Alam Sutera achieved core marketing sales of around Rp850 billion and Rp34 billion from the sale of land to CFLD. The company is on track to meet its full-year core marketing sales target of around Rp3.5 trillion but remained behind its land sale target of Rp1.5 trillion to CFLD.
If the company is able to achieve Rp2.5 trillion of core marketing sales and around Rp500 billion of land sales to CFLD, said Poh. However, if Alam Sutera is unable to execute its land sales to CFLD, Moody’s expects the adjusted debt to weaken around five times in 2019 and six times in 2020. While, homebuilding EBIT or interest expense would then also weaken to less than two times in 2020.
Based on the company’ data, debt maturity profile remains short at around 2.5 years and it will face a maturity wall in 2022. The company intends to tap $125 million of its 2022 notes and to use the net proceeds to redeem the outstanding $73 million of its 2020 notes, and for general corporate purposes.
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