S&P rates Spindo B

S&P said it assigned a B preliminary long-term corporate credit rating to PT Steel Pipe Industry of Indonesia Tbk. (Spindo).

The outlook is stable.

Spindo is a producer of welded tubes with applications in the infrastructure, utilities, water, automotive and consumer sectors. Its monthly capacity is over 50,000 metric tons.

The preliminary rating reflects the company's modest production and scale, the company's geographic concentration to Indonesia and its leveraged balance sheet, S&P said.

The company’s operations also require relatively high inventory levels, the agency said.

Working capital fluctuations also can pressure cash flows, S&P said.

Spindo's high margins relative to other downstream metal companies, its solid market position within certain niche segments in Indonesia and a fair product and customer diversity partially mitigate these constraints, the agency said.

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