Moody’s assigns B1 rating to Medco bonds

Moody’s Investors Service said it assigned a B1 rating to the proposed dollar-denominated backed senior unsecured notes to be issued by Medco Bell Pte. Ltd., a wholly owned subsidiary of Medco Energi Internasional Tbk., which Moody’s rates B1. The proposed notes will be guaranteed by Medco Energi and some of its subsidiaries.

The proceeds will be initially kept in an escrow account and will ultimately be used to repay Medco’s upcoming Indonesian rupiah-denominated bond maturing in 2021 and exercise a call or early tender of Medco’s 2022 dollar-denominated bond.

“Medco’s B1 rating reflects its improved scale and the geographic diversification of its reserves and production, following the acquisition of Ophir,” said Vikas Halan, a Moody’s senior vice president and lead analyst for Medco, in a press release.

Pro forma for Ophir acquisition, Medco expects to produce 110 thousand barrels of oil equivalent per day in 2019, up from 87 thousand boe per day in 2017. Also, Medco’s proved reserves has increased to 249.3 million boe at 30 September 2019 from 233.5 million boe at 31 December 2017.

“Medco’s credit metrics and liquidity are also supportive of its B1 rating. We expect the company’s debt/EBITDA to improve to below 4x in 2019 from 4.4x in 2018. This is despite the increase in its debt to fund the acquisition of Ophir Energy in 2019,” said Halan.

The outlook is stable.

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