Moody's cuts Medco Energi

Moody's Investors Service said it downgraded PT Medco Energi Internasional Tbk's corporate family rating to B2 from B1 and its senior unsecured rating on its senior 8 ¾% bonds due 2010 issued by MEI Euro Finance Ltd. to B3 from B2.

The outlook is negative.

The downgrade reflects Medco's reduced production base, high expenditure necessary to sustain production levels and weakening operating cost profile, Moody's said.

The ratings take into account its competitive cost position and extensive experience in Indonesia's operating environment, the agency said.

They also reflect a lack of committed long-term bank funding to fund both its upcoming debt maturities and capital expenditure over the next 12 months, Moody's added.

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