S&P affirms Medco Energi

Standard & Poor's said it affirmed the B long-term corporate credit rating on PT Medco Energi Internasional Tbk., along with its axB+ Asean scale rating.

The outlook remains negative.

The negative outlook reflects Medco's increased investment plans for extending its scope and cost escalation, S&P said.

Higher investment cost has negated somewhat the benefits of higher product prices and production, the agency said.

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

Medco's favorable location and cost structure, good growth potential in its development and exploration blocks and some insulation from currency instability temper these weaknesses, the agency said.

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