Lodha’s proposed bond may alleviate refinancing needs
Macrotech Developers Ltd’s (MDL’s) proposed bond will alleviate immediate refinancing needs, but that even if the bond goes ahead as planned, significant debt maturities and unfavourable industry conditions will keep refinancing risk high and liquidity weak, Moody’s Investors Service said on Wednesday.
“The proposed bond transaction is subject to significant execution and market risk, including the fulfillment of condition precedent, creating uncertainty around MDL’s ability to complete the bond transaction as planned,” said Moody’s Analyst Sweta Patodia in a new report.
MDL needs 343 million dollars to repay principal and interest on its US dollar bond maturing on March 13 and for 118 million dollars of that amount relies on proceeds from an inventory financing facility, the transfer of funds from its Indian operations and collections from existing sales.
The latter in particular also remains subject to market conditions.
Any delays in receiving such proceeds will prevent the bond transaction from progressing, increasing the likelihood of default. MDL does not have alternate financing arrangements in place to repay the maturing bond.