Still don't have long term conviction, but no near term negative catalysts    Our longer term concerns on the underlying credit and corporate governanceare unresolved. At the same time, we believe near term negative catalysts arewaning. Lodha's key markets in London and Mumbai have been fairly resilientto the shocks of demonetization and BREXIT respectively, at least so far.Consent solicitation has also gone through with 85% aproval rate asbondholders would have triggered a technical default if they didn't. On top,headlines are building on possible IPO. Hence, we take the ongoing bondweakness as an opportunity to upgrade the Lodha 2020s (103 offer as wewrite, Z+900bp, 10.6% ytm) to Hold. This is still one of the widest tradingperforming bonds in our universe. We will look to reset shorts if they go backto YTD highs of ~106. Key upside risks are a successful IPO and recovery inphysical property markets, while downside risks are further negative ratingactions, bond retap, delay in getting construction finance for the Mayfairproject, etc.    So what will it take to change our eventual view on Lodha?    One, we would like to see some deleveraging through the cash collections thatare currently being spent on servicing the high interest burden, constructioncosts and other expenses, which should help stabilize the credit ratings. Two,an improvement in corporate governance with reduction in related partytransactions, avoidance of recent events like covenant breaches, managementdelivering on its publicly-announced IPO plans (assuming market conditionsare supportive), etc.

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