FITCH Ratings has upgraded the long-term issuer default rating of Lippo Malls Indonesia Retail Trust : D5IU 0% (LMIRT) to “CC” from “C”, after having downgraded it to “C” from “CC” earlier this month.

The “CC” rating reflects the credit rating agency’s view that LMIRT is unlikely to raise sufficient funding to repay the remaining US$138.4 million of unsecured notes maturing on Jun 19 at par value, said Fitch in a report on Wednesday (Jan 31).

The previous downgrade to “C” on Jan 26 followed the announcement by the real estate investment trust (Reit) the day before that the tender offer for its senior unsecured notes due in 2024 and 2026 would proceed.

Fitch said in its report then that such a tender offer constituted a distressed debt exchange, as the transaction would lead to a material reduction in the original terms of the notes.

Fitch has also upgraded the rating on LMIRT’s senior unsecured notes due 2024 and 2026 to “CC”, from “C”, with the recovery rating remaining at “RR4”.

The “RR4” rated securities have characteristics consistent with securities historically recovering 31 to 50 per cent of current principal and related interest, said Fitch.

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Earlier on Wednesday, LMIRT announced that it had inked a cooperation agreement valued at 254 billion rupiah (S$21.6 million) for the Reit’s subsidiary to extend its right to operate Cibubur Junction, a Jakarta shopping mall, until Jun 29, 2045.

Units of LMIRT closed S$0.001 or 6.3 per cent higher at S$0.017 on Wednesday.