PEFINDO has lowered the rating of PT Waskita Toll Road (WTR) to idBB+ from idBBB-

(January 18, 2023)--Outlook for the corporate rating is stable. The rating downgrade reflects our view that the rating of WTR is now solely based on the Company’s standalone credit profile, following the recent development of its parent PT Waskita Karya (Persero) Tbk. (WSKT) (idBBB-/CWNegative), which is currently facing tight liquidity and heightening repayment risks from WSKT’s upcoming bond maturity in February of IDR2.3 trillion.

The rating reflects good prospects from its toll road projects. However, the rating is constrained by its high dependence on asset divestment, aggressive capital structure, and weak cashflow protection.

The rating may be raised if WTR successfully executes its divestment as planned to maintain solid cash flow while improving its financial profile significantly on a sustained basis. However, the rating may be lowered if it fails to divest its toll road assets as planned and followed by incurring higher-than-expected debts, which may weaken its capital structure and cash flow protection. The rating may also come under pressure if it fails to complete the toll road construction of its majority-owned subsidiaries, which may further delay the cash inflow from the toll road revenue and divestment pipelines.

Engaged in the toll road industry, WTR held shares in 10 toll road concessions as of September 30, 2022, with the shareholders consisting of WSKT (92.1%) and PT Taspen (Persero) (7.9%). (ends)