S&P upgrades Pakuwon Jati

S&P said it upgraded the long-term corporate credit rating on PT Pakuwon Jati Tbk. to BB- from B+.

The agency also said it raised the long-term issue rating on the company’s senior unsecured notes to BB- from B+, along with the long-term Asean regional scale rating to axBB+ from axBB.

The outlook is stable.

The upgrades reflect a view that Pakuwon Jati will continue to maintain a prudent financial policy and moderate debt while expanding over the next 24 months, S&P said.

Compared to other rated Indonesian real estate peers, Pakuwon Jati has been more disciplined in setting realistic sales targets and achieving them in the past two years, the agency said.

Amid a volatile and subdued property market in Indonesia, the company's strategy of deriving about half of its EBITDA from leasing income has provided a solid recurring earnings base and improved its earnings resilience compared with other developers, S&P said.

The company also has been more conservative in its strategy by limiting growth on ambitious new greenfield projects, choosing instead to expand its current development, the agency added.

This is expected to translate into credits metrics that are more stable through a real estate cycle, S&P said.

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