May 30, 2012

Pefindo downgrades Bakrie Telecom bond to idBB

Rating agency PT Pemeringkat Efek Indonesia (Pefindo) lowered its ratings for PT Bakrie Telecom Tbk (BTEL) and its Bond I/2007 to idBB from idBBB-.

Pefindo still places the ratings on Credit Watch with Negative Implication. The rating action is to reflect the raising refinancing risk for the Rp650 billion bond, which will fall due on September 4, 2012. 
As to date, the readiness to pay the maturing bond remains uncertain. New credit facilities to cover 70% of its bond principal, which is being facilitated by Credit Suisse AG, Singapore branch, has not been completed and the progress has been slower than expected.  
The company’s plan to invite new strategic investor through a non preemptive right issue, which will cover the remaining 30%, also still carries high degree of uncertainty.  
Pefindo will continue to monitor the company’s progress on the above corporate actions. The ratings could be lowered further if there is no significant progress within three months.
Established in 1993, BTEL provides wireless telecommunication services under the Esia brand.  As of December 31, 2011, the company covered 82 cities in Indonesia, supported by 4,016 BTS.
In providing its telecommunication services, BTEL uses CDMA 2000 1x technology on 800 MHz frequency. As of December 31, 2011, BTEL is owned by PT Bakrie & Brothers Tbk (22.0%) and public (78.0%).

Disclosure: No position at the stock mentioned above.

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