S&P rates Energi Mega notes B-

Standard & Poor's said it assigned a B- long-term corporate credit rating to PT Energi Mega Persada Tbk. and a B- rating to the proposed $275 million guaranteed senior secured notes to be issued by EMP International Holdings Pte. Ltd., which mature in 2015.

The outlook is stable.

The rating reflects the company's highly leveraged financial risk profile, exposure to hydrocarbon price movements resulting from a cyclical industry and the company's limited integration, large investment requirements and execution risk with its major projects, S&P said.

These weaknesses are offset to an extent by the company's good growth potential in its development blocks and the favorable outlook for energy demand in Indonesia, particularly for gas, the agency noted.

"EMP's financial risk profile is highly leveraged, in our opinion, and we expect its ratio of adjusted debt to EBITDA to be above 10x for the fiscal year ending December 2010," S&P analyst Andrew Wong said in a statement.

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