S&P downgrades Gajah Tunggal

Standard & Poor’s said it lowered the long-term corporate credit rating on PT Gajah Tunggal Tbk. to B from B+.

The agency also said it lowered the long-term issue rating on the company’s senior secured notes to B from B+, along with the company’s long-term Asean regional scale rating to axB+ from axBB.

The outlook is negative.

All of the ratings were removed from CreditWatch, where they were placed with negative implications in May, S&P said.

The agency said it lowered the ratings because Gajah Tunggal’s margins, cash flow adequacy ratios and debt-servicing capacity ratios are expected to remain below earlier expectations for the next 12 months, at least.

That is because of a combination of lower revenue, operating margin and EBITDA, S&P said.

Reported debt also increased following the depreciation in the Indonesian rupiah and still-elevated capital spending, the agency added.

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