PEFINDO: PT Waskita Toll Road rated “idBBB-” with stable outlook

(November 29, 2021)--PEFINDO has assigned its “idBBB-” rating to PT Waskita Toll Road (WSTR). The outlook for the corporate rating is “stable”.

An obligor rated idBBB has an adequate capacity to meet its long-term financial commitments relative to those of other Indonesian obligors. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. The Minus (-) sign indicates that the rating is relatively weak within the respective rating category.

The rating reflects very strong likelihood of support from its parent, PT Waskita Karya (Persero) Tbk. (WSKT, idBBB/Stable) and good prospects for toll road projects. However, the rating is constrained by the Company’s aggressive capital structure and weak cashflow protection, high dependence on asset divestment to finance business expansion, and business risk related to the development of new toll roads.

The rating may be raised if WSTR 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 the Company’s 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. The rating may also be lowered if we view a significant decline in the parent’s support and ownership.

Engaged in the toll road industry, Waskita Toll Road held shares on 13 toll road concessions as of June 30, 2021, with the shareholders consisting of WSKT (87.5%), PT Taspen (Persero) (7.9%), and PT Sarana Multi Infrastruktur (Persero) (4.5%). (ends)