Moody's disclosures on credit ratings of PLN
Monday, June 25 2012 - 12:23 PM WIB
Moody's current ratings on PT. Perusahaan Listrik Negara are:
Long Term Issuer (domestic currency) rating of Baa3
Senior Unsecured (foreign currency) ratings of Baa3
Senior Unsecured MTN Program (foreign currency) rating of (P)Baa3
PLN's Baa3 rating reflects the application of Moody's rating methodology for Government-Related Issuers (GRIs) updated in July 2010, which combines (i) the company's standalone credit quality, or Baseline Credit Assessment (BCA), and (ii) Moody's assessment of the credit support the government of Indonesia is likely to provide in a distress situation.
PLN's BCA of 10, which maps to Moody's global scale of Baa3, reflects its strategically important position as Indonesia's only vertically integrated electric utility, with a dominant position in generation, transmission and distribution, and its close linkage with the government, given PLN's 100% ownership by the MSOE as well as its reliance on government subsidies to ensure its financial viability and operational soundness.
The Baa3 rating incorporates the potential support that PLN is likely to get from the Indonesian government--also rated at Baa3 with a stable outlook--in a distress scenario. Under its rating methodology for GRIs, Moody's assessment of support is "High" as the credit profiles of PLN and the Indonesian government are closely linked to each other.
Furthermore, there is a high incentive for the Indonesian government to provide the necessary support to PLN because a default on its non-government debt obligations could lead to a cross default of the government-guaranteed bank financing for the company.
The rating outlook is stable, in line with the sovereign outlook. (ends)