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S&P downgraded Malaysia’s Serba Dinamik to D from CC following the latter’s failure to pay its $7mn missed coupon payment after a 30-day grace period ended on December 9, 2021, constituting an event of default. S&P said that it believes the default on the sukuk is likely to result in cross-defaults on its other $180mn sukuk due 2025. It added that Serba’s constrained ability to raise new external funding and persistent cash burn from operations will result in the engineering and construction company not being able to pay its debt obligations. Also, its rift with KPMG, Bursa and EY will further hinder its access to external capital.

Serba Dinamik’s dollar bonds were lower with its 6.997% 2025s down 1 point to 12.76 cents on the dollar.

For the rating action, click here

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