Fitch downgrades Multipolar, notes to B-

Fitch Ratings said it downgraded PT Multipolar Tbk.'s long-term issuer default rating to B- from B.

The agency also downgraded Multipolar's senior unsecured rating and $230 million notes due 2018 to B- from B with a recovery rating of RR4. The notes were issued by Pacific Emerald Pte Ltd., a wholly owned subsidiary, and guaranteed by Multipolar and certain subsidiaries.

At the same time, Fitch Ratings Indonesia downgraded the national long-term rating to BBB-(idn) from BBB+(idn).

The outlook is stable.

Fitch said the downgrade reflects its expectation of Multipolar's weaker credit profile on account of persistently weak performance from PT Matahari Putra Prima Tbk. for the next two years due to increasing mini-market format competition.

Cash flow pressure from weakening margins along with capex requirements for store expansion will affect MPPA's shareholder distribution ability. This will make Multipolar more reliant on dividends from PT Matahari Department Store Tbk.

Fitch expects Multipolar's fixed-charge coverage to remain below 1 time in 2017 and 2018.

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