Daily Brief Indonesia: Alam Sutera Realty and more

We view Alam Sutera’s (ASRI) tender offer as highly credit-negative. Noteholders which hold out would end up in a much worse position, without significant compensation. Holdouts could be left with notes that have no protective covenants, no reporting requirements, and lacking certain events of default. The proposed amendments would allow the company to act as it sees fit. That said, ASRI is still bounded by the indenture of the ASRIIJ 8.25 25, as long as these remain outstanding. We believe the development could be considered a distressed exchange by the rating agencies.

We recommend that holders of the USD 2024 bonds tender their notes. We also recommend to “Hold” the USD 2025 notes.