Moody s Investors Service has changed the outlook on Lodha Developers (LDL) to negative from stable . The change in outlook reflects the weakening in LDL s liquidity profile because of lower-than-expected operating sales and delays in execution of its planned asset sales, both in London and India, said Saranga Ranasinghe, analyst at Moody s tracking Lodha.
The global ratings firm affirmed the B2 corporate family rating of the company. Moody s has also affirmed the B2 senior unsecured rating of the US dollar-denominated bonds issued by Lodha Developers International and guaranteed by LDL.
Operating sales in both geographies in which LDL operates, Mumbai and London, were weaker than Moody s expectations in the nine months to December 2018 by around 20% and 50%, respectively, the ratings firm said.
Sales in Mumbai, which were affected by the tight liquidity conditions of housing finance companies in India during September 2018 to December 2018, have picked up in the quarter ended March 2019. However, Moody s expects the weakness in London to continue because of Brexit-related uncertainties.
In the absence of improvement in operating sales in London, LDL will be reliant on asset sales in both India and London to meet its liquidity needs, the ratings agency noted.
Given the negative outlook, Lodha s ratings are unlikely to be upgraded over the next 12-18 months. The outlook is unlikely to return to stable so long as the company s ability to repay its near-term debt remains contingent upon its ability to execute asset sales. The outlook could return to stable if the company demonstrates its ability to execute asset sales in a timely manner, it observed.