Fitch downgrades Multipolar

Fitch Ratings said it downgraded PT Multipolar Tbk.’s long-term issuer default rating to B from B+, along with its national long-term rating to BBB+(idn) from A(idn).

The agency also said it downgraded Multipolar’s senior unsecured rating and $230 million notes due in 2018 to B from B+ with recovery rating of RR4.

The notes are issued by Pacific Emerald Pte Ltd., a wholly owned subsidiary, and guaranteed by Multipolar and certain subsidiaries.

The outlook is stable.

The downgrades reflect Multipolar’s weaker overall business profile, stemming from the change in the assessment of the credit profile of PT Matahari Putra Prima Tbk., of which Multipolar owns a 50.23% stake, Fitch explained.

Sustained pressure on Matahari Putra’s credit profile will result in lower and less reliable dividends paid to holding company Multipolar to cover its operational expenses and interest servicing, the agency said.

Fitch also said it forecasts Multipolar’s fixed-charge coverage ratio to remain at less than 1.25x, which is not consistent with B+ and A(idn) ratings.

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