Moody’s Investors Service has placed Lippo Malls Indonesia Retail Trust (LMIRT)’s B1 corporate family rating and the B1 rating on the backed senior unsecured bond issued by LMIRT Capital, LMIRT’s wholly-owned subsidiary, on review for downgrade.

The outlook on all ratings from LMIRT has been changed to rating under review, from negative, says the manager of LMIRT, on September 3.

The review, which will take between 60 and 90 days, will focus on the funding structure of LMIRT’s proposed acquisition of its flagship asset Lippo Mall Puri from PT Mandiri Cipta Gemilang, a wholly-owned subsidiary of PT Lippo Karawaci Tbk, the sponsor of LMIRT.

The review will also look into the extent and impact of linkages between LMIRT and PT Lippo Karawaci Tbk following the acquisition due to the latter’s weaker credit profile. PT Lippo Karawaci Tbk has provided an irrevocable undertaking to apply for all the excess rights units not taken up by the unitholders which could in turn lead to the significant increase in its shareholding in LMIRT.

It will also focus on the progress on LMIRT ability to refinance its debt due in August 2021 and obtain waivers for any potential breaches of financial covenants on its bank loans due to weakening earnings caused by the Covid-19 pandemic.

LMIRT says it remains in compliance with its financial covenants and the aggregate leverage limit as prescribed.

Units in LMIRT closed flat at 11.7 cents on September 2.