Moody's rates Matahari bonds B1

Moody's Investors Service said it assigned a B1 senior unsecured rating to the proposed dollar-denominated bonds to be issued by PT Matahari International BV, which is guaranteed by PT Matahari Putra Prima Tbk. The agency also said it affirmed Matahari's B1 corporate family rating and the B1 senior unsecured rating on its guaranteed $150 million bonds due 2009.

A successful completion of such an exchange offer would materially enhance the company's liquidity and financial flexibility, thereby supporting its planned capital expenditure program of about Rp1 trillion in 2009, Moody's said.

The ratings recognize Matahari's leading position and long operating track record in the department store segment in Indonesia, the agency said.

These strengths are offset by the company's aggressive expansion plan and resulting negative free cash flow generation in the last few years, which is likely to continue over the medium term, Moody's added.

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