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

(Singapore, December 15, 2020) -- 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 (Persesro) (P.T.)'s (Inalum) Baa2 issuer rating reflects its standalone credit quality, captured by its ba2 Baseline Credit Assessment (BCA), and Moody's assessment of a high likelihood of extraordinary support from the Government of Indonesia (Baa2), which results in a three-notch uplift. Inalum is 100% owned by the Indonesian government.

The ba2 BCA is supported by (1) Inalum's strategic importance as a state-owned company mandated to manage the country's metal and mining assets; (2) the diversification of its mining operations; (3) its low cost, globally competitive operations; (4) its integrated commercial relationships with other state-owned enterprises (SOEs); and (5) our expectation that cash dividends received from its 65%-owned subsidiaries will provide sufficient interest coverage.

The BCA also reflects the Inalum's limited access to cash flow from PT Freeport Indonesia (PTFI) until 2022-23, sizable expansion and downstream projects across its businesses, and exposure to weak commodity prices.

This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.

The principal methodologies used for this review were Mining published in September 2018 and Government-Related Issuers Methodology published in February 2020. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. (ends)