Moody's affirms Perusahaan Listrik Negara

Moody's Investors Service said it affirmed the Ba3 corporate family and senior unsecured bond ratings of PT Perusahaan Listrik Negara.

The outlook is positive.

This action follows news that the company's wholly-owned subsidiary Majapahit Holding BV has launched a consent solicitation for its outstanding $450 million 7 ¼% guaranteed notes due 2011 and for its $550 million 7 ¾% guaranteed notes due 2016. These notes are issued by Majapahit and guaranteed by Perusahaan Listrik Negara.

Moody's said it believes there is high incentive for the Indonesian government to provide support to the company as a default could lead to a cross default of government-guaranteed bank financing and direct government debt.

The rating is closely linked to the Indonesian government's credit quality in light of the company's 100% ownership by the Ministry of State-Owned Enterprises, strategic importance as Indonesia's only vertically-integrated electricity utility, as well as the government subsidies to ensure its financial viability and operational soundness, the agency said.

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