Moody's Ratings affirms Hutama Karya's ratings following change in sovereign outlook; outlook stable(m)

(Singapore, February 06, 2026)--Moody's Ratings (Moody's) has today affirmed the Hutama Karya (Persero) (P.T.)'s (HK) Baa3 issuer rating,  Baa2 backed senior unsecured rating, (P)Baa2 backed senior unsecured MTN Program rating and b1 baseline credit assessment (BCA). The outlook was revised to stable(m) from stable, which reflects the presence of multiple, differentiated outlooks under the same issuer. The outlook on the issuer rating is stable. The outlook on its backed senior unsecured bonds and MTN program was revised to negative from stable, which mirrors the negative outlook on the sovereign rating.

The rating action follows the affirmation of the Government of Indonesia's Baa2 issuer rating and change in outlook to negative from stable on 5 February 2026. For full information on the sovereign rating action, please refer to our press release published on 5 February 2026: https://ratings.moodys.com/ratings-news/458869.

RATINGS RATIONALE

Today's rating action primarily reflects the negative outlook on Indonesia's Baa2 sovereign rating, which reflects increased risks to Indonesia's policy credibility, as reflected in reduced predictability and coherence in the policy making process, alongside less effective policy communications over the past year. If sustained, the trend could erode Indonesia's long established policy credibility, which has supported solid economic growth and macroeconomic, fiscal and financial stability. The affirmation of Indonesia's sovereign rating takes into account continued economic resiliency, backed by structural factors including its natural resource base and strong demographics, supporting stable and solid GDP growth outcomes.

Affirmation of HK's Baa3 issuer rating reflects the company's standalone credit quality or BCA of b1 and a four-notch uplift based on our assessment of a very high likelihood of support from, and the company's very high dependence on, the Government of Indonesia in times of need, given its strategic importance as the sole concessionaire of the Trans-Sumatra toll road project (TSTR). Under our joint default analysis (JDA) approach for government-related issuers (GRIs), the rating or credit quality of a government that provides extraordinary support to a GRI is a key input for that GRI's ratings.

The stable outlook on HK's Baa3 issuer rating reflects our expectation that HK will maintain its strategically important role in supporting the country's toll road and infrastructure sectors over the next 12-18 months.

On the other hand, the Baa2 and (P)Baa2 ratings on the guaranteed bond and MTN program reflects an unconditional and irrevocable guarantee from the Government of Indonesia. The negative outlook on HK's backed senior unsecured bonds and MTN program, mirrors the negative outlook of the government.

HK's b1 BCA, in turn, reflects fair concession terms, the evolving regulatory framework in Indonesia, as well as exposure to the non-toll construction business.

The company's BCA further considers the significant uncertainty regarding the timing and structure of the planned consolidation among state-owned construction and toll road enterprises in Indonesia. Due to limited information, we have not factored in any immediate credit impact in the BCA or the final rating.

We expect HK's funds from operations (FFO)/debt to be in the 5–7% range over the next one to two years, supported by higher operating cash flow from toll-road operations, as well as lower debt and interest expenses. However, this outlook is contingent on the current status and strategic direction regarding the TSTR. The trajectory could shift should the company revise its strategy to develop and fund new sections of TSTR, particularly given the elevated uncertainty surrounding future government equity injections.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

We could upgrade HK's issuer rating if the expected government support strengthens, reflected by an increase in the company's strategic importance, while at the same time, the government sets a longer track record of consistent, strong support for HK and clearly demonstrates commitment that government guarantees are honored.

HK's issuer rating could also be upgraded if the company's BCA is upgraded, and the relationship between the company and the government remains intact. The BCA could be upgraded if HK completes the Trans-Sumatra project while maintaining a disciplined approach to investments, with a sustained material improvement in its financial profile.

We could return the outlook on the guaranteed bonds and MTN program to stable, if the outlook on Indonesia's sovereign rating returns to stable.

On the other hand, we could downgrade HK's issuer rating if its relationship with the government weakens, illustrated by a decrease in the government's shareholding or diminished perceived support, potentially because of a merger with a less strategic entity. HK's issuer rating and the guaranteed bond ratings will also be downgraded if there is reasonable doubt as to the effectiveness of the government guarantee.

A downgrade of HK's BCA could also lead to a downgrade of the company's issuer rating. The BCA could be downgraded if there is a material deterioration in HK's financial metrics, potentially as a result of cost overruns and project delays, delayed improvement in toll road revenue, additional weakness in the non-Trans-Sumatra construction business segment, or consolidation with entities that have weaker credit profiles.

The rating on the guaranteed bonds and MTN program will be downgraded if the sovereign rating is downgraded.

The methodologies used in these ratings were Publicly Managed Toll Roads and Parking Facilities published in May 2023 and available at https://ratings.moodys.com/rmc-documents/403120, and Government-related Issuers published in May 2025 and available at https://ratings.moodys.com/rmc-documents/443641. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of these methodologies.

The difference between the scorecard-indicated outcome of Ba1–Ba2 and the BCA of b1 reflects HK's exposure to construction business , which is inherently more cyclical, as well as the uncertainty surrounding the sustainability of recent improvements in financial metrics.

Established in 1961, Hutama Karya (Persero) (P.T.) (HK) has several revenue-generating segments, including toll road operations, construction services and others. HK is 100% owned by the Government of Indonesia through 1 series A Dwiwarna share owned by the State-Owned Enterprise Management Agency (BP BUMN) and 131,645,999 series B shares owned by Danantara.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.

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For ratings issued on a program, series, category/class of debt or security, certain regulatory disclosures applicable to each rating of a subsequently issued bond or note of the same series, category/class of debt, or security, or pursuant to a program for which the ratings are derived exclusively from existing ratings, in accordance with Moody's rating practices, can be found in the most recent Credit Rating Announcement related to the same class of Credit Rating.

For provisional ratings, the Credit Rating Announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.

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Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

The Global Scale Credit Rating(s) discussed in this Credit Rating Announcement was(were) issued by one of Moody's affiliates outside the EU and UK and is(are) endorsed for use in the EU and UK in accordance with the EU and UK CRA Regulation. (ends)