Moody's Ratings revises PGN's outlook to negative following change in sovereign outlook

(Singapore, February 06, 2026)--Moody's Ratings (Moody's) has today affirmed Perusahaan Gas Negara Tbk (P.T.)'s (PGN) Baa2 issuer rating and baa2 baseline credit assessment (BCA). At the same time, the outlook on the rating was revised to negative from stable.

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.

While PGN's Baa2 ratings does not incorporate any uplift based on an assumption of support from the government, the rating is exposed to a weakening in the sovereign rating, as captured by the negative outlook, because of PGN's effective majority ownership by the government, and its domestic focused business that are linked to the local economy.

PGN's baa2 BCA further considers its strong projected financial metrics over the next two to three years, dominant market position as Indonesia's largest gas transmission and distribution (T&D) company, in addition to its exposure to the domestic economy and linkages to the government.

PGN's financial metrics have consistently strengthened over the past few years, with its retained cash flow (RCF)/debt growing to 43% in 2024 from 39% in 2023. As of 30 September 2025, the last twelve months RCF/debt stood at 42%.

PGN's core gas T&D business will continue to underpin its operational performance, albeit it may face some uncertainties due to the natural decline in PGN's main supplying gas block and the extended gas price cap. Nevertheless, we expect PGN's financial metrics to remain strong, supported by prudent debt management and a substantial cash reserve.

Over the next three to four years, PGN has planned substantial capital expenditure (capex) focused on growing its T&D business and expanding its liquefied natural gas capacities to address supply issues. We expect execution risks for the capex would be manageable, given PGN's extensive expertise and proven track record in project expansions and operations.

Despite our view of a high likelihood of support from the Government if required, PGN's rating did not incorporate any rating uplift for parental support, given that PGN's BCA is on par with the sovereign rating.

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

In view of the negative outlook, we do not expect any upward rating momentum on PGN's rating.

We could return the outlook on PGN to stable if the outlook on Indonesia's sovereign rating returns to stable and there is no material deterioration in PGN's standalone credit quality.

Conversely, we could downgrade rating and BCA of PGN, if the sovereign rating is downgraded. The BCA could also be downgraded if PGN's standalone credit quality weakens, with its RCF/debt remaining below 28% 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.

The difference between the scorecard indicated outcome of A3 and the BCA of baa2 reflects PGN's exposure to the domestic economy and linkages to the government.

Perusahaan Gas Negara Tbk (P.T.) is primarily engaged in the transmission and distribution of natural gas. PGN also engages in the upstream business, mainly through its fully owned subsidiary Saka Energi Indonesia (P.T.). The gas trading and T&D businesses remained the biggest revenue contributors, accounting for around 70%.

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)