Fitch rates Pakuwon Jati notes B

Fitch Ratings said it assigned a BBB-(idn) national long-term rating and B long-term foreign- and local-currency issuer default ratings to Indonesia-based PT Pakuwon Jati Tbk. and an expected rating of B with a recovery rating of RR4 to the $120 million senior unsecured notes due 2011 issued by Pakuwon Jati Finance BV and guaranteed by Pakuwon Jati.

The outlook is stable.

Proceeds from the notes will be used to refinance $40 million of existing debt and to fund the development of Superblock Gandaria, a 7.5 hectares mixed-use development to be built between 2006 and 2009 in South Jakarta.

The agency said Pakuwon Jati's ratings are supported by its position as a leading township developer and mall operator in Surabaya, Indonesia. Pakuwon Jati's current main asset is Superblock Tunjungan City, a well-established mixed-use development that includes an office building, hotel and condominium. The mall contributed 95% and 99% of total revenue and EBITDA, respectively, in 2005. Given its dominant market position, the mall, with its above-market occupancy rates and well-laddered lease maturity, is expected to continue to contribute strong predictable recurring cash flow to Pakuwon Jati.

Fitch said Pakuwon Jati's ratings are constrained by the project risks arising from the building of Superblock Gandaria, which will cost approximately Rp 1,700 billion. The company's ratings also reflect the low interest coverage ratio expected between 2006 and 2007 while Superblock Gandaria is being developed.

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