Serba Dinamik appears to have defaulted on the RM29.54mn ($7mn) coupon payment due yesterday as per the Malaysian Reserve news site. Custodians of Serba Dinamik’s bondholders have informed trustee HSBC of a default trigger in the event of a dissolution. The default was triggered on its $300mn 6.3% sukuk due in May 2022, issued by an indirect wholly owned subsidiary SD International Sukuk Ltd. The coupon payment due on November 8 had a 30-day grace period ending December 9, going by the sukuk’s covenants. The sukuk also consists of cross-default provisions with its other $180mn USD 7% sukuk due March 2025. Fitch recently downgraded both Serba Dinamik’s long-term issuer rating and the May 2022 sukuk to C as a result of missing the coupon in November, its tightening cash reserves, thin liquidity and increased refinancing risk. Additionally, Serba Dinamik’s shares continued to be suspended since late October. Adding to its pressures, Serba is also involved in legal disputes concerning Bursa Malaysia, EY Consulting and its original external auditors KPMG which flagged the audit issues in May this year.
Serba’s dollar bonds inched lower and trade at distressed levels of 13.5-14 cents on the dollar.
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