Fitch Ratings: Saka's Tender Offer Credit Neutral amid Sufficient Liquidity

(Fitch Ratings-Singapore-06 July 2023)--PT Saka Energi Indonesia’s (B+/Stable) tender offer for its USD376 million notes due 2024, if accepted by the holders, will have no immediate rating impact, Fitch Ratings says. Saka has sufficient cash available to finance the tender offer and can maintain adequate liquidity after the offer.

Saka plans to purchase for cash part of the outstanding 4.45% senior notes due 2024 for a total of up to the tender cap. The purpose of the tender offer is to proactively manage its 2024 debt maturity.

Fitch regards Saka’s tender offer for part of its US dollar bonds as an opportunistic move and we do not treat it as a distressed debt exchange since the company’s near-term liquidity remains adequate. Saka had USD385.8 million in readily available cash as of 31 March 2023, covering its USD376.3 million in debt maturities over the next 14 months. The tender offer, if successful, will reduce the refinancing requirement for Saka’s bonds when they mature in May 2024.

We expect its cash flows to be adequate to fully repay the bonds; in the event it requires additional funding, we expect support from its parent, PT Perusahaan Gas Negara Tbk (PGN, BBB-/Stable), the leader in Indonesia’s natural gas transmission and distribution.

Saka's ratings benefit from a two-notch uplift from its Standalone Credit Profile (SCP) of 'b-', based on our assessment of PGN's 'Medium' incentive to provide support, in line with our Parent and Subsidiary Linkage Rating Criteria. The 'b-' SCP reflects the constraints of the small size of its operations. The Stable Outlook reflects Saka’s adequate reserves in the near-to-medium term. (ends)