S&P also lowered its long-term ASEAN regional scale rating on Bumi to ‘axB+’ from ‘axBB-‘. The ratings remain on CreditWatch, where they were placed with negative implications on September 26, 2012.
“We downgraded Bumi because we expect the company’s cash flow to be weaker in 2013 than we had anticipated. We expect Bumi’s ratio of funds from operations to debt to be below 5% over the next 12 months,” said Standard & Poor’s credit analyst Vishal Kulkarni.
Bumi’s high interest and tax outgoings are likely to continue to erode its debt-servicing cushion. S&P anticipates that the company’s funds from operations to interest coverage will average 1x-1.5x over the next two to three quarters. (Indonesia Today)