Moody's announces completion of a periodic review of ratings of Indonesia Asahan Aluminium (Persero) (P.T.)

Singapore, May 03, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Indonesia Asahan Aluminium (Persero) (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.

Indonesia Asahan Aluminium (Persero) (P.T.)'s (Inalum) Baa2 rating reflects the company's Baseline Credit Assessment (BCA) of ba2 and three-notches of uplift reflecting our expectation of a high likelihood of extraordinary support from the Government of Indonesia (Baa2 stable).

The ba2 BCA is supported by Inalum's (1) position as Indonesia's (Baa2 stable) state-owned national mining company mandated with the responsibility of managing and consolidating the country's metal and mining assets; (2) the diversification of its mining operations; (3) its low cost, globally competitive operations; (4) integrated commercial relationships with other state-owned enterprises; and (5) a solid liquidity profile.

Further, the BCA reflects the company's (1) limited access to cash flow from its beneficial ownership in PT Freeport Indonesia (PTFI) until 2021-22; (2) the high likelihood that cash dividends received from 65%-owned subsidiaries will provide solid interest coverage of the PTFI acquisition debt; (3) sizable expansion projects underway or in planning stages across its businesses; and (4) exposure to commodity price volatility across the group. (ends)