PEFINDO: PT Putra Indotenaga (PITG) rated idA- with stable outlook

(January 10, 2023)--The corporate rating reflects PITG’s strong integration with Perusahaan Listrik Negara (Persero) (PPLN, idAAA/Stable), the strong profile of its strategic partners, and the growing demand for electricity. The rating is constrained by its indirect access to the operating cash flow of its joint venture companies, its limited access to direct funding from the PPLN group given the unrestricted subsidiary status, and the execution risks in its joint venture companies.

We may raise the rating if PITG’s joint venture companies are able to generate significantly stronger cash flow than projected, reduce their financial leverage, and deliver higher dividend payment to PITG. We may also raise the rating if PITG manages to strengthen its market position by establishing other joint venture companies with favorable equity scheme. We may lower the rating if there is a strong indication of significant weakening support from the PPLN group, or if PITG becomes more aggressive in financing its projects by incurring higher level of debt than projected.

Established in December 2013, PITG is the first PPLN subsidiary with an unrestricted subsidiary status to the Parent’s Indenture Global Bond covenant. The Company is the PPLN group’s vehicle for developing a power generation business segment by forming joint control partnerships with strategic partners. Currently, PITG has three joint venture companies in the power generation segment. As of June 30, 2022, PITG’s shareholder consisted of PT Indonesia Power (99.99%) and Yayasan Pendidikan dan Kesejahteraan – PT Indonesia Power (0.01%). (ends)