S&P puts Excelcomindo on positive watch

Standard & Poor's said it placed Indonesia-based PT Excelcomindo Pratama's B+ long-term corporate credit rating and the B+ rating on its $350 million bonds due 2009 on CreditWatch with positive implications.

S&P said the placement comes after Telekom Malaysia Bhd. (foreign currency A-/stable; local currency A/stable) increased its stake in Excelcomindo to 56.9% in October, becoming the majority shareholder.

A default in debt of more than $30 million by Excelcomindo will trigger a cross default on some of Telekom Malaysia's outstanding bonds amounting to $800 million, the agency said. The cross default clause is found in some of Telekom Malaysia's outstanding debt securities, such as its bond due 2014.

As such, S&P said there is a higher likelihood of Telekom Malaysia providing financial support to Excelcomindo in the event that the latter is unable to service its debt obligations.

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