BT : Lend Lease's rating may be cut

Published December 17, 2009

Lend Lease's rating may be cut

(SYDNEY) Lend Lease Group's credit rating may be cut to junk by Moody's Investor Service and Standard & Poor's after Australia's largest developer said it's part of a group picked as the preferred bidder for a A$1.4 billion (S$1.76 billion) ING property fund.

A group led by Lend Lease was yesterday approved as the top choice for the buyout of 14 ING Retail Property Fund assets in Australia and New Zealand, including the Joondalup shopping centre in Perth and the Harbour Town complex on the Gold Coast.

Moody's and S&P, which rate Lend Lease at their lowest investment grades Baa3 and BBB- respectively, said they are concerned about the company's plan to take on 20 per cent of the buyout cost.

'The review reflects the expected use of cash and debt that would be employed in funding the above acquisitions, and the negative impact this would have on Lend Lease's credit metrics,' Clement Chong, senior analyst at Moody's, said in a statement.

'There is a real risk that the company's credit metrics may come under our tolerance for the Baa3 rating,' he added.

Lend Lease has already used most of its debt capacity under its current rating with the purchase of Lend Lease Primelife, S&P credit analysts Paul Draffin and Craig Parker said in a statement.

'Furthermore, Lend Lease continues to secure development opportunities that will place further pressure on the group's near- term debt levels,' they said.

Lend Lease shares closed unchanged at A$9.50 in Sydney.

'We will work with S&P to explain what the acquisition will mean for us,' Lend Lease Australia chief executive officer Tarun Gupta said in an interview.

ING spokeswoman Johanna Keating said the negotiations are 'progressing well.' She declined to elaborate. -- Bloomberg


Moody's and S&P are concerned about the company's plan to take on 20 per cent of ING's buyout cost.