Fitch cuts Pakuwon Jati notes to CC

Fitch Ratings said it downgraded PT Pakuwon Jati Tbk's ratings and placed them on Rating Watch negative. Its long-term foreign- and local-currency issuer default ratings were downgraded to CC from CCC, national long-term rating to CC(idn) from B(idn) and $110 million senior notes due 2011 to CC from CCC. Its recovery rating was affirmed at RR4 and its senior bond I (outstanding Rp71.4 billion) due 2011 was downgraded to CC(idn) from B(idn).

The downgrades reflect the continued weak pre-sales from Pakuwon's superblock development project at Gandaria in Jakarta, Fitch said, and the increased likelihood of a debt restructuring this year.

Fitch noted that Pakuwon's management still plans to complete the construction of the Gandaria project. However, given that the project has been significantly delayed, the company plans to prioritize its cash balance for the construction of the project to avoid further delays, the agency said.

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