Moody's rates Gajah Tunggal notes B3

Moody's Investors Service said it assigned a provisional B3 rating to the proposed dollar-denominated notes to be issued by PT Gajah Tunggal Tbk.

Gajah Tunggal's B3 corporate family rating, and the ratings on the proposed notes and the existing dollar-denominated bonds issued by GT 2005 Bonds BV, and guaranteed by GT, continue to remain on review for upgrade, where they were placed on Dec. 19.

Proceeds will be used to fund the tender and redemption of the $413 million notes with the remainder to be used for capital expenditure in connection with the development of GT's truck and bus radial tire production plant.

GT's corporate family rating reflects its leading and competitive position in the Indonesian domestic tire market and its balanced product and geographical sales mix, the agency said.

The rating is constrained by the company's history of debt restructuring and its exposure to cyclical raw material prices and foreign currency movements, leading to volatile operating performance, the agency noted.

The company has a debt to EBITDA of 2x.

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