Moody's drops Gajah Tunggal to Caa1

Moody's Investors Service said it downgraded to Caa1 from B2 the corporate family rating and senior unsecured rating for the $420 million in bonds issued by GT 2005 Bonds BV and guaranteed by PT Gajah Tunggal Tbk.

"The downgrades were prompted by Moody's concerns that - given the tightened state of the global credit environment - the company faces extreme challenges in refinancing the $420 million in bonds, a sizable maturity, due in July 2010," Wonnie Chu, a Moody's analyst, said in a statement.

"Meanwhile, it is also exposed to the weakening operating environment against the backdrop of slow market demand and a depreciating Indonesian Rupiah," she continued. "As a result, the company will likely face increasing tighter liquidity in regard to its ability to service its interest coupon payments in the next 12 months."

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