PEFINDO affirms “idAAA” ratings for PT Angkasa Pura II (Persero) and its bonds, outlook revised to negative

(May 20, 2020)--PEFINDO has affirmed its “idAAA” ratings to PT Angkasa Pura II (Persero) (APIA), its Bond I Year 2016, and Shelf-Registered Bond I Phase I Year 2018. However, we revised the outlook for the corporate rating to “negative” from “stable” to anticipate lower revenue in the near term due to the Coronavirus Disease (COVID-19) pandemic, which took a severe toll on consumer’s willingness to travel, and the implementation of Transportation Ministry Regulation No. 25/2020, which temporarily restrict passenger travel, including traveling by air transportation, from April 24, 2020 to June 1, 2020. At the end of the first quarter of 2020 (1Q2020), most countries have implemented the lockdown policy as a containment measure, which inevitably impacted the airport industry. We are of the view that the pandemic will negatively impact APIA’s operating cash flows in the near term due to the lower revenue and the unavoidable fixed operating expenses. Our projection assumes significant cash inflow drops in 2020, while we expect the APIA’s performance to improve gradually starting in 2021. We are also of the view that it will likely depend on debt to finance its working capital during this pandemic. Currently, the Company is in the process of acquiring working capital loan from several state-owned banks and restructure all of its outstanding bank loans. We will keep monitoring the COVID-19 pandemic impact to the Company’s performance and the government support to APIA during the pandemic.

An obligor rated idAAA has the highest rating assigned by PEFINDO. The obligor’s capacity to meet its long-term financial commitment, relative to that of other Indonesian obligors, is superior.

The corporate rating reflects the strong government support to APIA due to the critical role of airports, the Company’s strong competitive position as the nation’s largest airport operator, and its well-diversified revenue. However, the rating is constrained by its high financial leverage in the near to medium term.

The rating will be lowered if the industry's unfavorable conditions remain longer than expected and the government support during the COVID-19 pandemic is lower than expected. The rating could also be lowered if PEFINDO views a reduction in government support, such as through a material divestment of ownership. The outlook could be revised to stable if the APIA’s revenue starts to recover and records positive growth month-over-month on a sustained basis.

As a state-owned enterprise (SOE) engaged in airport and airport-related services, PT Angkasa Pura II (Persero) operates 19 airports, including the Soekarno-Hatta International Airport in Tangerang (Banten), the country’s largest airport and main gateway, Kualanamu International Airport in North Sumatra, and recently, it also operates Radin Inten II Airport in Lampung, H.A.S Hanandjoeddin Airport in Belitung, and Fatmawati Airport in Bengkulu. As of March 31, 2020, PT Angkasa Pura II (Persero) was 100% owned by the Government of Indonesia. (ends)