S&P downgrades Japfa Comfeed

Standard & Poor’s said it lowered the long-term corporate credit rating on PT Japfa Comfeed Indonesia Tbk. to B from B+.

The outlook is negative.

The agency also said it lowered the long-term rating on the senior unsecured notes that Japfa guarantees to B from B+, along with its long-term Asean regional scale rating on the to axB+ from axBB.

S&P said it downgrades reflect an expectation that Japfa’s margins and cash flows will be substantially below earlier expectations for the next 12 months at least.

The agency also downgraded Japfa’s stand-alone credit profile to B from B+ because the company’s cash flow adequacy in 2015 likely will be much lower than anticipated.

Certain supply-side adjustments from the large poultry producers may take place in the second half of 2015 and help Japfa’s margins in 2016, S&P said.

But the timing of those adjustments, their materiality and impact on margins is uncertain, the agency said.

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