Moody's has assigned a CAA1 rating to the realty firm's proposed dollar senior secured bonds; here are five questions about this development, answered
In a new turn of events, on Thursday morning, investor rating agency Moody’s assigned a Caa1 rating to the proposed dollar senior secured bonds to be issued by Lodha Developers International Ltd, a wholly owned subsidiary of Macrotech Developers Ltd (MDL), which is already rated Caa1 negative by the firm.
A Caa1 rating by Moody’s are judged to be of poor standing and are subject to very high credit risk.
What is MDL up to?
Simply put, Lodha needs to repay the principal and interest associated with the maturing of $324 million senior unsecured bond by 13 March 2020. To repay this loan, they are planning to raise capital through a senior secured bond of $225 million; and the rest through cash flows from their UK and Indian businesses.
So what’s this escrow account?
According to Moody’s report, “in order to proceed with the bond transaction, as a condition precedent, the company must raise $118 million, which will be deposited in an escrow amount.”
The infographic below explains the break-up of the $118 million it needs to have in the escrow before launching the fund raise.
In an emailed statement, Abhishek Lodha, managing director and chief executive officer at Macrotech Developers Ltd said, “Earlier this week, we raised GBP 86 million (INR 800 crores) in the UK. With these proceeds and additional cash flows from our UK and India businesses, we look forward to fully repaying our 2020 USD bonds in March 2020.”