Fitch trims Tunas Baru Lampung

Fitch Ratings said it trimmed PT Tunas Baru Lampung Tbk.'s (TBLA) long-term issuer default rating to B from B+ and the rating on the $168 million of 7% senior unsecured notes due 2023, issued by wholly owned subsidiary, TBLA International Pte. Ltd. and guaranteed by TBLA and all its majority-owned operating subsidiaries, to B from B+ with an RR4 recovery rating.

Concurrently, Fitch said it lowered TBLA's national long-term rating to A-(idn) from A(idn) and TBLA's Rp 1.5 trillion of senior unsecured bonds to BBB+(idn) from A(idn). The bonds are rated one-notch below the national long-term rating due to subordination issues.

“The downgrade reflects our view that TBLA's financial flexibility has weakened and that it continues to face refinancing risk, despite obtaining a secured syndicated loan facility to redeem its outstanding U.S.-dollar notes and up to Rp 950 billion of rupiah bonds. We think TBLA's large debt maturities, especially in 2023, are unlikely to be met by free cash flow, leaving the company reliant on refinancing from existing lenders due to uncertain access to public debt markets,” the agency said in a press release.

Fitch noted it expects TBLA to refinance a substantial part of its debt in the next 12 months with its lenders.

The outlook is stable.

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