S&P lowers MNC Investama notes

S&P said it lowered the long-term issuer credit rating on PT MNC Investama Tbk. and the long-term issue rating on the $365 million senior secured notes that Ottawa Holdings Pte. Ltd. issued to CC from CCC-.

MNC Investama guarantees the notes.

The outlook is negative.

S&P also said it assigned a preliminary B- rating to the company's proposed $220 million senior secured notes.

The downgrades follow MNC Investama's proposed exchange offer for its $365 million senior secured notes, which are due in May 2018.

S&P also said it views the transaction as a distressed exchange, tantamount to a default, upon completion because it believes the participating $115 million noteholders will receive less value than originally promised.

The agency also said it believes that without the exchange, the probability of a payment default would be extremely high.

MNC Investama proposes to swap $115 million of the existing notes into subordinated debt and exchange the balance with new three-year $220 million senior secured notes and cash, S&P explained.

The ratings reflect the expectation that, following the exchange offer and completion of associated refinancing transactions, S&P said it would rate MNC Investama at B-.

The ratings reflect the company's aggressive management strategy, weak liquidity at the holding company level absent asset and stake sales, the agency said, and ongoing long-term risks associated with servicing the anticipated capital structure.

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