S&P: Medco Energi view to negative

Standard & Poor's said it revised the outlook on PT Medco Energi Internasional Tbk to negative from stable, and affirmed its B long-term corporate credit rating. The agency also said it lowered the Asean scale rating on Medco to axB+ from axBB- and withdrew the B issue ratings on the $176.9 million convertible bonds due May 12, 2011, issued by Medco CB Finance BV and the $325.4 million guaranteed notes due May 22, 2010 following their repayment.

The negative outlook reflects the potential execution risks associated with Medco's major projects and an expectation that the company's financial risk profile will weaken further over the next two to three years, S&P said.

The ratings reflect Medco's exposure to hydrocarbon price movements, large investment requirements and aggressive financial policy that relies on debt to fund future growth, S&P said.

These weaknesses are mitigated by Medco's favorable location and cost structure, good growth potential and a degree of insulation from currency instability and sovereign-debt risk, the agency said.

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