PEFINDO: PT Angkasa Pura II (Persero)’s rating lowered to “idAA+”, outlook maintained negative

(June 21, 2021)--PEFINDO has lowered the ratings of 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 to “idAA+” from “idAAA”. The outlook for the corporate rating was maintained at “negative”. The downgrades reflects our view that the prolonged pandemic has adversely impact the Company’s overall credit profile. We are of the view that the pandemic will weaken APIA’s operating cash flows in the medium term 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 state budget particularly during this pandemic, prompting the government to be more selective in providing extraordinary support to state-owned enterprises. In our view, as a profit-seeking entity, APIA will be encouraged to access external funds to fulfill its own financial obligations, given its strong financial flexibility.

An obligor rated idAA differs from the highest-rated obligors only to a small degree, and has a very strong capacity to meet its longterm 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 recovery rate is 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 provide support to APIA weakens which may be indicated by a significant reduction in control over APIA. The outlook may be revised to stable if the Company starts to operate and gain revenue normally on sustained basis which also depends on the expected economic recovery and success of the success of the vaccination program to contain the outbreak.

As a state-owned enterprise (SOE) engaged in airport and airport-related services, APIA operates 20 airports, including the SoekarnoHatta International Airport in Tangerang (Banten), the country’s largest airport and main gateway, Kualanamu International Airport in North Sumatra, and recently, it also operates Jenderal Besar Soedirman Airport in Purbalingga. As of March 31, 2021, APIA was 100% owned by the Government of Indonesia. (ends)