14 February 2020
Friday, 14 February 2020
8:56 AM - Sumber : news.iqplus.info
IQPlus, (14/02) - Fitch Ratings has assigned a rating of 'BBB' to PT Pertamina (Persero)'s (Pertamina; BBB/Stable) proposed US dollar notes to be issued under its USD10 billion global medium-term note programme.
Pertamina's ratings are equalised with that of its parent, the Republic of Indonesia (BBB/Stable), in line with Fitch's Government-Related Entities Rating Criteria. This is based on our assessment of very strong linkages between Pertamina and the state as well as the state's incentive to provide support. Fitch continues to assess Pertamina's Standalone Credit Profile (SCP) at 'bbb-'.
The US dollar notes are rated at the same level as Pertamina's senior unsecured debt as they constitute direct, unconditional, unsubordinated and unsecured obligations of Pertamina. The bond proceeds will be used for refinancing, capex and general corporate purposes.
KEY RATING DRIVERS
Very Strong State Linkages: Fitch sees Pertamina's status, ownership and control by the Indonesian sovereign as 'Very Strong'. The state fully owns Pertamina, appoints its board and senior management and directs and approves its investments. Pertamina is also the state holding company for the oil and gas sector. The government has a high level of influence in setting the prices of fuel, which are retailed by Pertamina. Some prices are set well below market rates, and Pertamina receives reimbursements for these shortfalls. Pertamina distributes nearly all the subsidised fuels in Indonesia under the state's public-service obligation (PSO) mandate.
We see the support record as 'Very Strong' and believe there is a high likelihood of state support for Pertamina if needed. The state has compensated Pertamina for the losses incurred from selling fuels below market prices and the amount of compensation has been sufficient to keep Pertamina's financial profile at a healthy level. Support can also be seen in the state continuing to award some of the larger oil and gas blocks upon the expiry of their production sharing contracts (PSC) to Pertamina, which should help improve its business and financial profile.
'Very Strong' Incentive to Support: Fitch sees the socio-political implications of a default by Pertamina as 'Very Strong'. A default would materially impact Indonesia's energy security, including derailing the massive investments required in the oil and gas sector, domestic fuel production and the state's ability to import crude oil and refined products. Indonesia, through Pertamina, imports around half of its refined product and around 30% of crude requirements. We believe a financial default would have a very strong effect on the state as Pertamina is one of Indonesia's key borrowers, is an active international and domestic debt issuer, and is viewed by investors as a proxy government borrower. (end)