Fitch: Pan Brothers notes B

Fitch Ratings said it assigned a long-term foreign-currency issuer default rating of B to PT Pan Brothers Tbk., along with an expected B rating with recovery rating of RR4 to its proposed senior unsecured notes.

The notes will be issued by Pan Brothers' wholly owned subsidiary, PB International BV, and guaranteed by Pan Brothers and certain subsidiaries.

The outlook is positive.

The proposed notes will rank pari passu with senior unsecured obligations of Pan Brothers and its subsidiaries as they represent the company's unconditional, unsecured and unsubordinated obligations, Fitch said.

The ratings are underpinned by the company’s position as Indonesia's largest publicly listed garment manufacturer by capacity, established relationships with global apparel brands and its contractual revenue visibility over a 12- to 18-month horizon, the agency said.

These strengths are balanced by the company's limited bargaining power with its top customers, resulting in high working capital requirements and negative cash flow from operations, the agency said.

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