Lodhas will raise funds to pay $ 320 million bonds

Mumbai: Developers International, a subsidiary of Macrotech Developers (formerly Lodha), had proposed to float an international bond issue of around $ 200 million to pay the $ 324 million due on March 13, 2020. However, the rating agency Moody's has said the company can issue the bonds only after it deposits $ 118 million in a escrow account for the repayment of its expired bonds.

Fundraising in the coming weeks is crucial for the developer. Moody's said its negative outlook reflects market risk and uncertainty around the short-term refinancing plans of Macrotech developers and a persistent level of refinancing risk for 12 months. The rating agency said that if the next bond is refinanced, it could review the rating to stable. However, if the company does not pay the $ 324 million on time, it could be lowered.

The company already has access to a $ 112 million inventory facility, secured against unsold apartments in Lincoln Square, one of the Macrotech Developers London projects However, about $ 78 million will be used to pay for an existing construction loan in the project, leaving only $ 34 million to deposit in the escrow account. Any delay in receiving such income will result in a deficit in the escrow account and will prevent the bond transaction from progressing, which increases the probability of default. Macrotech Developers have no alternative financing arrangements to pay the bond that expires, said Moody’s analyst Sweta Patodia.

According to the rating agency, even if the company is able to fulfil the conditions required to proceed with the transaction, the bond execution — of at least $225 million — remains subject to market conditions. In addition, there are more repayments coming up. Macrotech Developers has a $672-million construction loan outstanding at Grosvenor Square — its second London project — which is due for repayment in March 2021. The company also has about $323-million debt maturing in its India operations over 12 months.