PEFINDO affirms ratings for Waskita Karya, bonds
Saturday, October 29 2022 - 09:26 AM WIB
(October 28, 2022)--PEFINDO has affirmed the ratings for PT Waskita Karya (Persero) Tbk (WSKT) and its shelf-registered (SR) bonds III and shelf-registered bonds IV at idBBB. At the same time, we also affirmed the ratings for its bond III and bond IV at idAAA(gg) as well as its Sukuk Mudharabah I at idAAA(sy)(gg). The outlook for the corporate rating is stable.
The corporate rating reflects WSKT’s important role to the government, strong market position, and its benefits as a major state-owned construction company. However, the rating is constrained by its weak liquidity, weak credit metrics in addition to the volatile business environment in the construction sector. The idAAA(gg) rating reflects the full, unconditional, and irrevocable guarantee from the government of Indonesia for WSKT’s bond III, bond IV, and Sukuk Mudharabah I.
The rating may be raised if WSKT significantly improves its leverage and debt service coverage on a sustained basis, supported by a contract backlog that will provide strong revenue visibility over the next few years. However, the rating may be lowered if we believe that our assessment of the government’s support of WSKT weakens.
Significantly weaker access to external funding, particularly with state-owned banks, may also trigger a downgrade in its rating as it will reduce WSKT’s ability to carry out its operational activities; hence, exposing it to project completion delays and lower profitability. Weaker access to external funding will also expose WSKT to higher liquidity and refinancing risks. The rating may also be subject to a downgrade if WSKT continuously fails to win adequate new contracts, resulting in insufficient revenue visibility.
WSKT is one of the largest construction companies in the country engaging mainly in providing construction works with a contribution of more than 88% of its revenue in the first half of 2022. Its other businesses include precast concrete, steel fabrication, toll roads, property, and energy. The Indonesian government held a 75.35% stake in WSKT as of June 30, 2022, with the remainder being publicly owned. (ends)