Fitch revises outlook on Waskita Karya to stable

Fitch Ratings said it revised the outlook on PT Waskita Karya (Persero) Tbk. to stable from negative and affirmed the national long-term rating at A(idn). Fitch also affirmed the A-(idn) national long-term ratings on the company’s Rp 10 trillion bond program and the outstanding issuance under the program.

“The action reflects our view of WSKT’s strategic importance to the government’s infrastructure development program,” said Fitch in a press release.

State-owned construction companies such as WSKT have been at the forefront of the government’s infrastructure development program, which not only requires participants to navigate complex regulatory and bureaucratic hurdles but also requires significant investment in projects (on behalf of government) that have long payback periods.

Most of these government contracts involve turnkey contracts where payments are received only upon completion. WSKT’s weak financial profile reflects the requirement of significant investment in working capital, essentially on behalf of the government, which exerts pressure on financial performance but also suggests a stronger linkage with government, the agency said.

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