S&P reviews Japfa, rates notes BB-

S&P said it placed its B+ long-term corporate credit rating and axBB long-term Asean regional scale on PT Japfa Comfeed Indonesia Tbk. on CreditWatch with positive implications.

At the same time, the agency placed the B+ issue rating on Japfa's guaranteed senior debts on CreditWatch with positive implications.

S&P also assigned a preliminary BB- long-term foreign currency issue rating to the company’s proposed issuance of dollar-denominated senior unsecured notes due 2022.

"We placed the ratings on CreditWatch because PT Japfa's proposed partial refinancing of its U.S. dollar bond due May 2018 should lengthen its debt maturity profile and reduce refinancing risk," S&P credit analyst Eric Nietsch said in a news release.

While Japfa has not yet finalized the amount of the proposed issuance due 2022, the agency said it expects the transaction size to contribute materially toward the refinancing of about $200 million of outstanding dollar-denominated bonds maturing 2018.

S&P also said it believes the company will have sufficient funding alternatives to call its remaining bonds, given: (a) About Rp 1.2 trillion in cash on hand as of Dec. 31, 2016 (excluding Rp 1.5 trillion in cash that the company used in January 2017 to repay maturing rupiah-denominated bonds); (b) operating cash flows that the agency estimates at over Rp 1 trillion over the next 12 months; and (c) access to domestic bond and bank loan markets.

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