Fitch rates Pupuk Indonesia bonds AAA(idn)

Fitch Ratings Indonesia said it assigned a national long-term rating of AAA(idn) to PT Pupuk Indonesia's proposed Rp 10 trillion bond program and the proposed Rp 3.6 trillion senior unsecured bonds to be issued under the program.

The company will use the proceeds to refinance its existing debts.

The proposed bonds are rated at same level as the company's national senior unsecured debt rating as they represent direct, unconditional, unsecured and unsubordinated obligations of the company.

Fitch said it assesses Pupuk Indonesia to be a key state-owned entity as the company is the Indonesian government's sole agent to produce and distribute subsidized fertilizer to eligible farmers in the country through a public-service obligation (PSO) scheme. The subsidies cover a portion of Pupuk Indonesia’s production and distribution costs plus a margin over the government's regulated fertilizer selling price, which is below the market price, the agency explained.

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