JAKARTA (TheInsiderStories) — Indonesian property developer, PT Bumi Serpong Damai Tbk (IDX: BSDE), through its unit, Global Prime Capital Pte. Ltd., plans to offer a senior notes. The firm will use some of the proceeds to repay existing indebtedness and for working capital, and other general corporate purposes.
Last year, unit of Sinar Mas Group, has tried to refinance the debt with worth of US$300 million but the demand are weak. After hold for months, now the company has planned to buyback the bond again.
During the tender offer period on August 27 to Sept. 2, 2019, the incoming bids only reached $161.83 million. Based on the Singapore Stock Exchange rule Bumi Serpong Damai much get offering at least $200 million.
Moody’s Investors Service has assigned rating of Ba3 to the proposed notes Ba3 and some of its subsidiaries, and rank pari passu with the 2021 and 2023 notes. The rating outlook is stable.
“The proposed notes are not exposed to either legal or structural subordination risk. The rating is therefore aligned with BSD’s Ba3 corporate family rating” says Jacintha Poh, a Moody’s VP and Senior Credit Officer in an official statement released today (01/20).
At Sept. 30, 2019, around 62 percent of BSDE‘ total debt was unsecured. Moody’s points out that the majority of BSD’s earnings and borrowings are held at the holding company, which is a guarantor to the notes.
“We view BSDE’ use of the net proceeds from the proposed notes to refinance its 2021 notes as credit positive, because the new issuance will extend its weighted-average debt maturity,” adds Poh.
The rating agency also expects Bumi Serpong Damai‘ liquidity to remain very good over the next 12 – 18 months, supported by the company’s large cash holdings. At third quarter of 2019, the developer had cash and cash equivalents of Rp6.9 trillion ($492.86 million.
Moody’s expects the company to generate around Rp1.8 trillion of operating cash flow from Sept. 30, 2019 through to Dec. 31, 2020, which will be sufficient to cover projected dividend payout of around Rp200 billion, maturing debt obligations of around Rp600 billion, and projected capital spending of around Rp2.5 trillion.
BSDE‘ Ba3 rating reflects its established position as one of the largest property developers in Indonesia, with diversification across multiple projects and property segments. The company’ scale and diversification also provide the company with the flexibility to alter its product offerings and cater to changing market demand.
The rating incorporates of the property caompany’ focus on the sale of land lots and the development of low-rise commercial and residential properties, which entail lower development risks and support its strong gross margins.
Poh revealed, the stable rating outlook reflects Moody’s expectation that BSDE will achieve at least Rp5 trillion of marketing sales each year and maintain financial discipline as it pursues growth. An upgrade of BSD’ rating is unlikely over the next 12 – 18 months, but upward momentum could emerge, if the company successfully executes its business plans while maintaining healthy credit metrics and good liquidity.
Established in 1984, Bumi Serpong Damai is one of the largest developer listed on the Indonesia Stock Exchange by market capitalization. The company and its subsidiaries are engaged in the development, management and operation of residential townships, condominium towers, office buildings, retail malls and hotel properties.
The developer is sponsored by Sinarmas Land Ltd, which held an approximate 60 percent stake in BSDE at third quarter of last year.
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