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., along with a B rating to a proposed issue of senior secured notes that the company and its subsidiaries guarantee.

The outlook is positive.

Energi Mega's subsidiary, EMP International Holdings Pte. Ltd. will issue the notes.

The ratings reflect the company's large capital expenditure requirements relative to its free cash flow generation, S&P said.

The ratings also consider the limited track record of Energi Mega's development blocks, the agency said, and the company's exposure to volatile oil prices and asset concentration in Indonesia.

The company's good growth potential in its blocks, long-term fixed-price gas sales contracts and the favorable outlook for energy demand in Indonesia temper the above weaknesses, S&P said.

The rating is based on the assumption that the company will refinance its debt with the proposed notes, the agency said.

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