Moody's announces completion of a periodic review of ratings of Indika Energy Tbk (P.T.)
Tuesday, April 30 2019 - 06:49 AM WIB
(Singapore, April 30, 2019) -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Indika Energy 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.
Indika Energy Tbk P.T.'s (Indika) corporate family rating of Ba3 is supported by the (1) solid cash flow generation from its 91% ownership of Indonesia's third largest coal miner, PT Kideco Jaya Agung (Kideco); (2) long-dated debt maturity profile with no material maturities until 2022-24; and (3) commitment to conservative financial policies.
Counterbalancing these strengths, Indika's Ba3 rating remains constrained by (1) the uncertain regulatory environment, given the lack of visibility into or guidance from the government on the extension or conversion of Kideco's coal contract of work (CCoW), which expires in 2023; (2) volatility in earnings and operating cash flows and; and (3) exposure to execution risk surrounding its strategy to increase business diversification. (ends)