Moody’s rates Pelabuhan Indonesia bonds Baa3

Moody’s Investors Service said it assigned a definitive Baa3 rating to Pelabuhan Indonesia II’s $1.1 billion senior unsecured bonds due 2025 and $500 million senior unsecured bonds due 2045.

The agency also said it affirmed the company’s Baa3 issuer rating and raised its baseline credit assessment to Baa3 from Ba1.

The outlook is stable.

The proceeds will be used for capital expenditures, repayment of the $550 million syndicated bank loan facility and other general corporate purposes, Moody’s said.

The ratings reflect the company’s baseline credit assessment and do not factor in any uplift from the government due to its high credit assessment relative to Indonesia’s sovereign rating, the agency said.

Nevertheless, Moody’s said it believes the Indonesian government will provide a high level of support if extraordinary financial support is required, particularly in light of its full ownership of Pelabuhan Indonesia, which plays a pivotal role in Indonesia’s maritime transportation sector.

The company’s credit strengths include favorable industry dynamics and continuing strong demand growth, its dominant position in Indonesia and high barriers to entry into its industry, the agency said.

The ratings are constrained by its sizable expansionary capital expenditure plan to expand its capacity and weak financial metrics, Moody’s said.

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