Moody’s Investors Service on Friday downgraded the corporate family rating of Macrotech Developers (MDL) — formerly known as Lodha Developers — to B3 from B2.

At the same time, the rating agency also downgraded the senior unsecured rating of the US dollar-denominated bonds issued by Lodha Developers International (LDIL) and guaranteed by MDL to B3 from B2. The outlook on all the ratings above is negative.

Data from Bloomberg showed that total debt of Macrotech Developers Limited stood at Rs 23,373 crore as on March 2018.

“The downgrade reflects heightened liquidity risk at MDL, because of the company’s lack of sufficient progress in refinancing its upcoming debt maturities,” says Sweta Patodia, a Moody’s analyst.

In its rating rationale the rating agency said, MDL has a Great Britain Pound (GBP) 250 million construction loan with respect to Lincoln Square, one of its London projects, maturing in December 2019, $324 million in bonds maturing in March 2020 (after the $1 million buyback), and another GBP517 million of construction loans maturing in March 2021.

“MDL’s initial plan to refinance the $324 million bonds through proceeds from equity stake sales in London projects is now uncertain, while progress on commercial asset sales in India has also been slower than what Moody’s had expected and remains subject to further delays”, adds Patodia, who is Moody’s lead analyst for MDL.

However, Lodha group said that a large part of the concern stems from the maturity of its USD bonds in March 2020 and the term-sheet to cover the entire bond payment have been finalised. “The definitive documentation on this facility should be in place in next 8 to 10 weeks, many months before bond maturity. The above along with ongoing sales pipeline in London should put at rest any concerns around repayment of US dollar bonds,” said spokesperson from Lodha Group.

But the rating agency said that although LDIL has received terms of offer from one of the existing lenders for refinancing the outstanding USD bonds, the loan agreement is yet to be executed and remains subject to finalisation of terms and due diligence. “As such, even though the company has made progress on its refinancing efforts, it needs to progress further to mitigate the near term liquidity risk” said Moody’s report.

Lodha group also added that their debt levels have to be seen in the context of the fact that their ready and near ready residential inventory and receivables in India worth Rs 27,000 crore and London worth £1.4 billion and our ready commercial assets of Rs 2,000 crore more than adequately cover the debt levels. But Moody’s also said that the ratings also incorporate governance risks arising from the company’s concentrated ownership structure and its aggressive financial policies.