May 11, 2011

S&P assigns BBB- for Astra International

Standard & Poor's Ratings Services (S&P) said today that it had assigned its BBB- long-term corporate credit rating to PT Astra International Tbk (ASII). The outlook is stable.
"Astra's credit profile is similar to Indonesia's foreign currency rating (foreign currency BB+/Positive/B; local currency BB+/Positive/B; ASEAN scale axBBB+/axA-2) because we expect the company to meet its financial obligations in the event of sovereign financial stress," said a press statement today.
The credit profit also factors in Astra's exposure to cyclical and economically sensitive businesses (such as palm oil and mining contracting), increasing competition in the automobile business, and potential large investments in capital intensive businesses with possible high execution risks.
"We expect Astra [excluding financial services] to have low leverage, generate strong foreign currency cash flows, and receive support from its automobile principals," said Standard & Poor's credit analyst Wee Khim Loy.
"In addition, the company has good capital market standing and excellent financial flexibility because many of its operating companies are listed and have good market positions in their respective industries." (wiw)
Astra's liquidity is strong. As of March 31, 2011, Astra had a cash balance of Indonesian rupiah Rp8.16 trillion (US$936 million). 

Disclosure: No position at the stock mentioned above.
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