PEFINDO: PT Angkasa Pura II (Persero)’s rated “idAA+” with negative outlook

September 7, 2021)--PEFINDO has affirmed its “idAA+” ratings for PT Angkasa Pura II (Persero) (APIA), its Bond I Year 2016, Shelf-Registered Bond I Phase I Year 2018, and Shelf-Registered Bond I Phase II Year 2020. We also maintained its “negative” outlook for the corporate rating to anticipate slower EBITDA and FFO recovery due to the Covid-19 pandemic, which took a severe toll on consumer’s willingness to travel combined  with  additional  restrictions  in  air  transportation  worldwide.  We  are  of  the  view  that  the  pandemic  has  weakened  APIA’s operating cash flows due to the lower revenue and the unavoidable fixed operating expenses. In addition, the likelihood of extraordinary support from the government to APIA may be lower given the constraint of the state budget particularly during this pandemic, prompting the government to be more selective in providing extraordinary support to state-owned enterprises. We are also of the view that it will likely depend on debt to finance its working capital during this pandemic. The Company plans to repay its maturing Shelf-Registered Bond I Phase I Year 2018 Serie A of IDR200.0 billion on December 12, 2021 using internal cash. As of June 30, 2021, APIA had cash and cash equivalent of IDR1.9 trillion.

An obligor rated idAA differs from the highest-rated obligors only to a small degree, and has a very strong capacity to meet its long-term financial commitments relative to those of other Indonesian obligors. The plus (+) sign indicates that the rating is relatively strong within its category.

The  corporate  rating  reflects  the  strong  government  support  to  APIA  due  to  the  important  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.

The rating may be lowered if the business recovers slower than expected or if APIA becomes more aggressive in financing its capital expenditures. Reduced financial flexibility in obtaining financing sources may also trigger a rating downgrade. The rating may also be lowered if we view that the government’s commitment to providing support to APIA weakens, which may be indicated by a significant slackening of its control over APIA. The outlook may be revised to stable if the Company starts to operate and strengthen its month-to-month revenue on a sustained basis which also depends on the expected economic recovery and the success of the vaccination program to contain the outbreak. The outlook may also be revised to stable if the company successfully execute its strategic initiatives as reflected by a significant additional cash inflow on a sustained basis. 

As a state-owned enterprise (SOE) engaged in airport and airport-related services, APIA operates 20 airports, including Soekarno-Hatta International Airport in Tangerang (Banten), the country’s largest airport and the main gateway, and Kualanamu International Airport in North Sumatra. In June 2021, it also operates Jenderal Besar Soedirman Airport in Purbalingga. As of June 30, 2021, APIA was 100% owned by the Government of Indonesia. (ends)