Moody’s could lower Indika

Moody's Investors Service said it placed the B2 corporate family rating of PT Indika Energy Tbk. on review for downgrade.

At the same time, the agency placed the B2 ratings on the $300 million notes due 2018 and the $500 million notes due 2023, issued by Indo Energy Finance BV and Indo Energy Finance II BV, respectively, on review for downgrade. The two issuers are wholly owned subsidiaries of Indika, which unconditionally guarantees the notes.

"We have initiated the review following the announcement of the proposed discounted note repurchase offer and will focus on the amount of loss incurred by participating noteholders," Moody's vice president and senior analyst Brian Grieser said in a news release.

"In addition, we will evaluate the likelihood of future discounted repurchases as well as the post-transaction capital structure and liquidity profile in light of continued weakness in thermal coal prices."

On Nov. 23, Indika announced an offer to repurchase for cash up to $100 million of its outstanding $300 million senior notes due May 2018. It offered to repurchase the notes at between $600 and $650 per $1,000 tendered, including a $50 early tender premium. The offer only impacts roughly 10% of Indika's outstanding debt and a third of its 2018 notes.

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