Moody's Ratings assigns Baa2 to PLN's drawdown

(Singapore, January 26, 2026)--Moody's Ratings (Moody's) has assigned a Baa2 rating to the proposed senior unsecured notes to be issued by PLN (Persero) (P.T.) (PLN, Baa2 stable).

The outlook on the rating is stable.

The notes will be issued under PLN's existing USD15 billion senior unsecured medium-term note (MTN) program, which is rated (P)Baa2.

The company plans to use the proceeds to partially fund its capital expenditure requirements and for general corporate purposes.

RATINGS RATIONALE

PLN's credit profile reflects the company's standalone credit quality or Baseline Credit Assessment (BCA) of ba2 and a three-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 (Baa2 stable) in times of need, given its strategic importance in ensuring the country's energy security.

The government's shareholding in PLN was transferred in early 2025 to Danantara, a newly established investment body for Indonesia. Despite the change in shareholding structure, we continue to consider PLN a government-related issuer, given the government's golden share and associated veto rights as well as its continued involvement in PLN's operations via Danantara and the Ministry of Finance. Whilst not assumed in our base case scenario, initiatives introduced over time that would point to a reduction in the ability and willingness of the government to provide support could lead to a reassessment of the support assumptions.

PLN's ba2 BCA, in turn, incorporates the company's position as Indonesia's only state-owned vertically integrated electric utility, including its dominant position in generation, and transmission and distribution (T&D), its high financial leverage as well as the execution risk and large funding requirements in support of Indonesia's transition towards net zero. Over the next 2-3 years, we expect the group's cashflow from operations pre-working capital (CFO pre-WC)/debt to moderate towards 7%-9% range as additional debt are incurred to fund capital spending.

PLN's financial profile is highly dependent on compensation payments and grants from the government to recover any shortfall between its regulated revenue entitlements and actual tariff collections. As a result of the significant investment planned for the next decade, we expect PLN's reliance on compensation payments will continue to increase, in the absence of any relaxation to the power tariff freeze. We note that the company has a track record of receiving compensation and grant payments from the government in a timely manner over the last few years, the continuation of which will be key to PLN's BCA.

PLN's stable outlook reflects the stable outlook on Indonesia's sovereign rating and the company's strategically important position as the country's only vertically integrated electric utility; its dominant positions in generation and T&D; and its close links with the government.

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

An upgrade of Indonesia's sovereign rating could trigger an upgrade of PLN's rating, given the close links between the two entities.

PLN's BCA could be upgraded, on the other hand, if the company can improve its CFO pre-WC/debt to remain above 10% on a consistent basis, after factoring in its investment requirement in support of Indonesia's net zero targets. An upgrade will also be predicated on continued timely receipt of subsidies and compensation income from the government.

Conversely, a downgrade of the sovereign rating will almost certainly trigger a downgrade for PLN. Furthermore, a partial privatization of PLN or a significant reduction in government subsidies or delays in receiving compensation income could trigger a downgrade. PLN's BCA could be lowered if it funds a greater-than-expected proportion of its planned capex with debt, such that its CFO pre-WC/debt falls below 6% on a sustained basis.

The methodologies used in these ratings were Regulated Electric and Gas Utilities published in August 2024 and available at https://ratings.moodys.com/rmc-documents/426183, 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.

PLN (Persero) (P.T.) is the only vertically integrated electricity utility in Indonesia and is ultimately 100% owned by the Indonesian government. The company is the dominant operator of generation plants and T&D networks in the country, the country's largest electricity producer as well as the sole off-taker for Indonesia's independent power producers.

REGULATORY DISCLOSURES

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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)