PEFINDO: PT Waskita Toll Road rating affirmed at “idBBB-”, outlook revised to stable

(May 9, 2022)--PEFINDO has affirmed its “idBBB-” rating for PT Waskita Toll Road (WSTR). The outlook for the corporate rating was revised to “stable” from “negative”. The rating action reflects the the similar revision on the credit rating outlook of its parent, PT Waskita Karya (Persero) Tbk. (WSKT, idBBB/Stable), following the near-term realization of its fund-raising corporate action plan through bonds issuance guaranteed by Government of Indonesia, which will significantly reduce its refinancing risk associated with the maturing financial liabilities.

WSTR is considered as a core subsidiary of WSKT and therefore any changes in the parent’s corporate rating and/or outlook will be mirrored to WSTR.

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, 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, PT Waskita Toll Road held shares on 12 toll road concessions as of September 30, 2021, with the shareholders consisting of WSKT (87.5%), PT Taspen (Persero) (7.9%), and PT Sarana Multi Infrastruktur (Persero) (4.5%). (ends)