Fitch assigns B+ to Soechi notes

Fitch Ratings said it published PT Soechi Lines Tbk.'s long-term issuer default rating of B+ with a negative outlook.

The agency also assigned a B+(EXP) expected rating to the proposed dollar-denominated senior unsecured notes to be issued by Soechi's wholly owned subsidiary Soechi Capital Pte. Ltd.

The notes will be guaranteed by Soechi and all its operating subsidiaries and the proceeds are intended to be used mainly to refinance Soechi's existing debt.

Fitch said Soechi's key shipping business is relatively stable, supported by growing demand, a robust market position and regulatory protection. However, the shipyard segment has underperformed relative to expectations and has been a drag on the leverage profile.

The situation is compounded by a lack of new shipbuilding contracts, the agency explained.

The negative outlook factors in the risk that Soechi's FFO-adjusted net leverage will remain higher than 4 times, the level above which Fitch would consider negative rating action, until 2018, given a lack of cash flow visibility for its shipyard business.

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