Moody's downgrades Pakuwon Jati

Moody's Investors Service said it downgraded PT Pakuwon Jati's corporate family and senior secured bond ratings to B3 from B2. The ratings remain on review for possible downgrade.

The downgrade follows the weakening of Pakuwon's credit metrics and liquidity profile resulting from weak property demand, material depreciation of the rupiah and the tightened financial market, Moody's said.

The company's adjusted EBIT-to-interest ratio of 1.0-1.5x and debt-to-EBITDA ratio of 5.5-6.0x are more appropriate for its B3 ratings, Moody's said.

The depreciating rupiah will increase Pakuwon's debt servicing obligations from its dollar-denominated bonds. That, along with the tightened bank lending market, will add pressure to Pakuwon's liquidity during 2009, the agency said.

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