Moody’s lowers Indika Energy

Moody’s Investors Service said it downgraded the corporate family rating of Indika Energy Tbk., along with the ratings on the $300 million notes due 2018 issued by Indo Energy Finance BV and the $500 million notes due 2023 issued by Indo Energy Finance II BV to B3 from B2.

The two bond issuing entities are wholly owned subsidiaries of Indika and both notes are unconditionally guaranteed by Indika, Moody’s said.

The outlook is negative.

This action concludes a review for downgrade that began in November.

The downgrades reflect Indika’s weak credit metrics, including a balance sheet that will remain highly leveraged following the proposed bond repurchase, Moody’s said.

The downgrades also consider a view that continued low prices for thermal coal will pressure Indika’s earnings and cash flows in 2016 and 2017, the agency said.

The ratings also consider expectations that Indika’s liquidity will remain adequate given its high cash balances and manageable refinancing risk over the next 12 to 18 months, Moody’s said.

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