Moody's cuts Bhakti Securities

Moody's Investors Service said it downgraded Bhakti Securities' national-scale debt rating of Baa1.id to Baa2.id with a negative outlook. This action concludes the review for possible downgrade that began last October.

The action reflects Bhakti's increasing earnings volatility - against the backdrop of a major downward correction in the Indonesian stock market, both in trading values and volumes - and that has made its debt servicing capability comparably weaker than that implied in the previous Baa1.id rating, Moody's said.

Its earnings volatility was mainly due to mark-to-market losses in its proprietary positions, some of which were investments in its affiliates, the agency said. The firm's moderately high risk appetite for equity investments makes its earnings more vulnerable to market shocks, Moody's added.

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