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S&P rates Medco notes B
S&P said it assigned a B long-term issue rating to the recently issued dollar-denominated senior unsecured notes guaranteed by PT Medco Energi Internasional Tbk. and issued by its fully owned subsidiary, Medco Oak Tree Pte. Ltd.
Medco will use the proceeds from the issuance to pay for both the acquisition of Ophir Energy plc and relevant transaction costs, the agency explained.
S&P said it incorporated the effect of this issuance and the Ophir Energy acquisition into the ratings on Medco.
The company's assets are located in Indonesia – a jurisdiction considered to have a weak rule of law, a lack of creditor-friendly features and no consistency in the conformity of the distribution of proceeds to legal rankings of claims, the agency said.
Recovery prospects in the event of bankruptcy are uncertain in the country because of the weak jurisdictional context, S&P said.
The rating on the notes was preliminary because Medco's guarantee was pending the notes issuance and acquisition of Ophir Energy, both of which are now finalized, the agency said.
The positive outlook reflects the potential for an upgrade over the next nine to 12 months, S&P added.
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