SINGAPORE (Yosefardi) – Standard & Poor’s Ratings Services (S&P) had on Tuesday (Oct 15) lowered its long-term corporate credit rating on PT Bumi Resources Tbk. (Bumi) to ‘CC’ from ‘CCC’. The outlook is negative.
At the same time, S&P lowered the rating on senior secured notes that Bumi guarantees to ‘CC’ from ‘CCC’. It also lowered our long-term ASEAN regional scale rating on Bumi to ‘axCC’ from ‘axCCC’.
“We lowered the rating on Bumi because we view the company’s recent agreement with its key lender China Investment Corp. (CIC) as a distressed debt exchange equivalent to a de-facto default,” said Standard & Poor’s credit analyst Xavier Jean.
“The negative outlook reflects the likelihood that we will lower the rating on Bumi to ‘SD’ (selective default) once the company’s proposed transaction with CIC is completed,” said Mr. Jean. “We will then review Bumi’s credit profile after assessing the company’s operating cash flows, debt maturity profile, debt interest coverage and leverage ratios, and liquidity.”
Moody’s Investors Service (Moody’s) has also in October 10, 2013 downgraded Bumi’s corporate family rating to Ca from Caa1, thereby concluding its review initiated on July 22, 2013.
Moody’s has also downgraded to Ca the ratings on its $300 million senior secured notes issued under Bumi Capital Pte. Ltd., and the $700 million senior secured notes issued under Bumi Investment Pte. Ltd. Both entities are wholly owned subsidiaries of Bumi Resources. The ratings outlook is stable.