Moody's upgrades Gajah Tunggal

Moody's Investors Service said it upgraded the corporate family rating of PT Gajah Tunggal Tbk. to B2 from Caa1 following the successful issuance of $250 million of senior secured notes due 2022 and a committed five-year $250 million senior secured loan facility.

The proceeds will be earmarked to refinance the $500 million notes due in February 2018, Moody's said.

The agency also said it upgraded the ratings on the $250 million senior secured notes due August 2022 and the $500 million senior secured notes due February 2018 to B2 from Caa1.

The outlook is stable.

The upgrades reflect the significant improvement in its capital structure and debt-maturity profile following the successful refinancing of its 2018 notes, Moody's said.

On Aug. 11, Gajah Tunggal issued a notice of redemption to redeem the outstanding $500 million senior secured notes Sept. 11, with proceeds from the recent notes issuance and loan facility, the agency explained.

The ratings reflect the company's leading position in the Indonesian motorcycle tire market, balanced product mix and improving geographic diversification of sales, Moody's said.

The ratings also consider Gajah Tunggal's improved capital structure and solid credit metrics with an adjusted debt-to-EBITDA ratio of 3.7x, the agency said.

The ratings also incorporate an expectation for some moderation in Gajah Tunggal's profitability and cash flows given its growth in export sales, Moody's said.

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