Fitch ups Indika Energy, notes

Fitch Ratings said it upgraded PT Indika Energy Tbk.'s long-term foreign- and local-currency issuer default ratings to B+ from B- and removed the ratings from rating watch positive.

The outlook is positive.

The agency also upgraded Indika's outstanding senior notes due 2023 and Indika Energy Capital II Pte Ltd.'s $265 million senior notes due 2022 (guaranteed by Indika) to B+ from B- with a recovery rating of RR4.

In addition, Fitch assigned Indika Energy Capital III Pte. Ltd.'s $575 million senior notes (guaranteed by Indika) a final rating of B+ with a recovery rating of RR4.

Fitch said the upgrade reflects its expectations of improvement in Indika's credit profile following the acquisition of an additional stake in PT Kideco Jaya Agung, Indika's key coal mining asset.

“The additional stake in Kideco, in our view, will increase cash flows available to Indika, based on Fitch's updated coal price assumptions relative to the additional debt required for financing the transaction,” the agency said in a news release.

“We believe Indika's consolidated business profile and credit metrics, given its enhanced operating and financial control of Kideco, will be comparable with other low BB rated coal peers. However, the company's lumpy debt maturities constrain the ratings.”

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