S&P: MNC Investama on watch

Standard & Poor’s said it placed the BB- long-term corporate credit rating and axBB+ long-term Asean regional scale rating on PT MNC Investama Tbk. on CreditWatch with negative implications.

The agency also said it placed on negative watch the BB- long-term issue rating on the senior secured notes issued by Ottawa Holdings Pte. Ltd. and guaranteed by MNC Investama.

The watch placement reflects the prospects of weakened interest coverage and higher consolidated leverage at the company through 2016, S&P said.

This comes after subdued operating performance at the holding company’s media operations over the past six months, the agency said, and growing interest expense due to currency depreciation and higher leverage at key subsidiaries.

MNC Investama relies on dividends from its operating subsidiaries to service interest on $365 million in senior notes at the holding company, S&P said.

Industry conditions in Indonesia’s media sector are expected to remain tough for the next 12 months as subdued consumer sentiment translates into slower advertising growth.

This will continue to affect earnings growth and reduce prospective dividend payments to MNC Investama, the agency said.

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