Moody's assigns Baa2 to Hutama Karya's guaranteed bond
Monday, April 27 2020 - 09:30 PM WIB
(Singapore, April 27, 2020)--Moody's Investors Service has today assigned a first-time (P)Baa2 rating to Hutama Karya (Persero) (P.T.) (HK) $1.5 billion backed global medium-term note (GMTN) program. At the same time, Moody's has assigned a Baa2 senior unsecured rating to the proposed USD bond issuance under the GMTN program. The program and bond ratings will benefit from an unconditional and irrevocable guarantee from the government of Indonesia (Baa2 stable).
RATINGS RATIONALE
RATIONALE FOR THE RATING OF THE PROPOSED GUARANTEED BOND
The rating assigned to the GMTN program and the proposed bond are in line with Indonesia's sovereign rating, reflecting the government's unconditional and irrevocable guarantee. The alignment with the sovereign rating reflects the application of Moody's methodology, Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts, May 25, 2017.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating on the guaranteed bond is likely to remain aligned with the sovereign rating and will be affected by negative or positive rating developments at the sovereign rating level.
The principal methodology used in these ratings was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1068154. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
Established in 1961, Hutama Karya (Persero) (P.T.) (HK) is one of the largest engineering, procurement and construction (EPC) companies in Indonesia by revenue. The company's key business segments are infrastructure, industry and EPC, property investment and realty.
The company reported revenues of IDR26.4 trillion (full-year 2019) and an order book of IDR58.9 trillion (2.2x revenues) as of December 2019.
HK is 100% owned by the Government of Indonesia through the Ministry of State-Owned Enterprises (MSOE). (ends)