Fitch trims Buana Lintas Lautan

Fitch Ratings said it lowered PT Buana Lintas Lautan Tbk.'s (BULL) long-term issuer default rating to B from B+. Fitch Ratings Indonesia downgraded the national long-term rating to BBB+(idn) from A-(idn). The agency also placed the ratings on rating watch negative.

“We estimate that BULL's debt has more than tripled since end-2018, driven by vessel acquisitions, to around $400 million by end-2020, including $170 million added in 2020. As a result, debt due in 2021 is significantly more than in 2020, and we estimate that the company's free cash flow will be insufficient to address it,” Fitch said in a press release.

The RWN reflects risks it may struggle to meet its long-term debt maturities in 2021 without prompt refinancing or equity raising.

BULL is working to refinance a portion of its debt and raise debt against working capital and through other means to boost liquidity. The company may also raise equity in 2021. The latest appraisal value of BULL's shipping fleet of more than $600 million and its record of equity inflows in the last four years suggest it should succeed in its efforts, Fitch said.

“However, these efforts are subject to risks from adverse market conditions, and a further rating downgrade is likely if BULL is unable to raise adequate funding within the next few months,” the agency said.

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