Moody's announces completion of a periodic review of ratings of Bumi Resources Tbk (P.T.)

(Singapore, April 30, 2019) -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Bumi Resources Tbk (P.T.) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Key rating considerations are summarized below.

Bumi Resources Tbk (P.T.)'s (Bumi) B3 rating reflects : (1) its majority shareholdings in two of Indonesia's largest thermal coal producers, Kaltim Prima Coal (P.T.) (KPC) and Arutmin Indonesia (P.T.) (Arutmin); and (2) its improved liquidity profile after the completion of its debt restructuring in December 2017, which materially lowered Bumi's cash interest burden on its debt, and reduced its near-term refinancing risk as it has no material debt maturities until December 2022.

However, Bumi's rating is constrained by (1) its dependence on cash dividends received from KPC and Arutmin to service its debt; (2) the compounding effect of payment in-kind interest that will result in a significant increase in debt should Bumi have insufficient cash to make periodic interest payments; (3) its exposure to thermal coal price volatility; and (4) elevated regulatory risk, given that Arutmin's and KPC's coal contract of work (CCoW) will expire in 2020 and 2021, respectively. (ends)