Scope Ratings, the European credit rating agency, downgraded the issuer rating of the Georgian development company JSC Lisi Lake Development to B- from B+ and revised the outlook to negative from stable.

The rating agency also downgraded the senior unsecured debt rating to B from BB-.

The downgrade is due to the deterioration of operating performance in 2022 and the first half of 2023, which led to deterioration in credit performance, liquidity problems and management problems.

The business risk profile (revised to B from B+) remains constrained by the company’s limited size as a residential property developer, with total Scope-adjusted assets of around GEL 687m (EUR 236m) at end June 2023.

The Negative Outlook also captures the uncertainties surrounding the refinancing of the senior unsecured bonds in December 2024, as indicated by below par liquidity.

An audit of the development company JSC Lisi Lake Development, conducted by the Big Four accounting firm Ernst & Young, early February revealed significant discrepancies in the company's financial statements.

The Supervisory Board of the company includes the children of the leaders of Lelo opposition party, Mamuka Khazaradze and Badri Japaridze.