Fitch rates Pelindo II IDR, bonds BBB-

Fitch Ratings said it assigned PT Pelabuhan Indonesia II (Persero) (Pelindo II) a long-term foreign currency issuer default rating and a senior unsecured rating of BBB-.

The outlook is stable.

The agency also assigned Pelindo II's proposed senior unsecured dollar-denominated bonds a BBB-(EXP) expected rating.

Fitch said the BBB- ratings reflect Pelindo II's standalone credit profile, which benefits from its entrenched market position with limited competition in the regions it operates in, robust growth prospects and its stable operating cash flows.

The standalone ratings are constrained by Pelindo II's large expansionary capex program, leading to sizeable negative free cash flows over the medium term. The ratings would benefit from two notches of uplift in the event its standalone credit profile falls below that of its 100% shareholder, the Republic of Indonesia (BBB-/stable), owing to its strategic importance to the state.

The proposed dollar-denominated bonds are rated at the same level as Pelindo II's issuer default rating because they will constitute direct, unconditional and senior unsecured obligations of the company.

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