S&P: Japfa view to negative

Standard & Poor’s said it revised the outlook on PT Japfa Comfeed Indonesia Tbk. to negative from stable.

The agency also said it affirmed the BB- long-term corporate credit rating on Japfa and BB- rating on the senior unsecured notes issued by Comfeed Finance BV that the company guarantees.

In line with the outlook revision, S&P also said it is lowering our long-term Asean regional scale rating on Japfa to axBB from axBB+.

The outlook revision reflects expectations that Japfa’s cash-flow adequacy ratios could weaken beyond the downgrade rating triggers over the next 12 months because of tougher industry conditions and the prospect of its capital spending remaining elevated, S&P said.

The agency said it believes Japfa’s debt-to-EBITDA ratio could reach about 4.5x in 2014 and remain at more than 4x over the next 12 months as subdued demand and persisting overcapacity in day-old chicks and commercial farming compress its operating margins.

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