Lippo Malls Indonesia Retail Trust (LMIRT) has decided to not redeem its outstanding S$120mn 6.6% Perps on the first call date of December 19, 2022. Thus, the coupon will reset then to the prevailing 5Y SOR plus the initial credit margin of 475.5bp. Based on the current SOR rate of 3.715%, the coupon is likely to reset to around 8.47%. Going by market pricing, the non-redemption of the perps was not unexpected as the bonds have been trading broadly at 66 cents on the dollar since September. LMIRT said that it was adopting a conservative approach to preserve cashflow and liquidity, and that taking on new debt to redeem the undated notes would only increase leverage and reduce debt headroom. It added that the current market conditions were unfavorable to issue any new perps at a yield lower than new estimated coupons.

LMIRT’s SGD 6.6% Perp was trading flat at 66 cents on the dollar.

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