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Jan 28 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has given the final ranking on the a€˜B+a€™ the recovery rating a€˜RR4a€ on the bonds of™ PT Alam Sutera Relaty Tbk (ASRI, a€˜B+a/ Stable) of USD 225 million with a coupon of 9% and will mature in 2019. Bonds issued by the Natural Synergy Pte Ltd and ASRI and guaranteed by certain subsidiaries.
Bonds are given the same rank with the senior unsecured debt rating ASRI because these bonds are direct obligations of the company reflects, unconditional, unsecured, and subordinated. this ranking following the receipt of final documentation in accordance with the information that has been previously received. The final rating in accordance with the expected rating given on January 7, 2014.
Proceeds of the bonds will be used to finance the repurchase bonds amounting to USD 150 million, which will mature in 2017, the project development and construction, the purchase of the rest of the 2017 bonds in 2015, and to general corporate purposes.
Factors Supporting Rating
Small Scale, Diversification Project: rating scale reflects the effort ASRI small, the concentration of projects and volatility inherent in the development of business property. Previously, more than 50% of sales come from marketing ASRI housing project in Serpong, a satellite town located in the western part from Jakarta. Fitch expects the company will gradually have more diversified business portfolio with development projects ASRI second dwelling on the Market Thursday. Management estimates market will Chemish contributed approximately 43% of total sales marketing in 2013 (2012: 18%).
Stability in Central Challenges: Year 2014 will be a year full of challenges for the development of business property upper middle class, such as ASRI project in Serpong, with tighter mortgage rules and elections investor sentiment will come lose. Fitch expects sales higher marketing at Market Thursday and stable recurring income from shopping malls and cultural parks will be able to fill sales lower marketing in Serpong.
Thursday market has a strategic role in capturing demand stable of buyers lower middle segment, with a more affordable price and first home buyers are excluded from tighter mortgage rules. Fitch expects sales from Thursday Market, which is located about 15 km from Serpong will provide income stability for ASRI.
Exacerbating the weakening Rupiah Mismatch: Property developers with loans in USD currency negatively impacted by the weakening Euro, where it is increasing the burden of debt to currency sales. The weakening of the Rupiah marketing and sales significantly lower than estimates have ASRI worsen the debt ratio as measured with presales / gross debt (2013F: 0.95x). Nevertheless, Fitch expects to be able to keep the profile ASRI debt according to rank, with presales ratio / gross debt was 0.75x for the period over the next 12 months, which supports the outlook Stable. Debt repayment profile is well distributed is also a factor additional support, with the maturing debt profile is extended to 2019 and subsequent to the issuance of new bonds.
Good Track Record: The rankings also take into account the land bank has ASRI relatively inexpensive and broad, strategic location of the project, and project execution successful. ASRI is one of the pioneers in developing occupancy in large scale in Serpong, which is now a popular alternative to the area another in Jakarta. Fitch believes ASRI will be able to continue to take advantage of a story success in Serpong to launch another project in the future, such as the has been shown with higher sales than expected in the Market Thursday.
Negative: future developments that may, individually and collectively, triggering the decline include:
- Improved and sustainable debt ratios, where the ratio of presales / gross debt is below 0.75x on an ongoing basis (2014F: 0.80x)
- Increased exposure to other businesses (non-core)
Positive: Increased levels are not expected because of the nature of business expansion the cyclical properties, small-scale business enterprises, and diversification limited effort.