S&P affirms Gajah Tunggal

Standard & Poor's said it affirmed its B corporate credit rating on PT Gajah Tunggal Tbk.

The outlook is stable and the affirmation follows the successful issuance of a five-year $325 million senior unsecured bond (rated B) issued by GT2005 Bonds BV and irrevocably and unconditionally guaranteed by Gajah Tunggal.

The rating on Gajah Tunggal reflects weaknesses that include an aggressive financial policy and despite significant improvement in its debt leverage over the past three years, its debt to capital remained high at 67.3% at Dec. 31, 2004, as well as weak cash flow protection measures, S&P said.

These are somewhat offset the company's low cost position due to its integrated business and the low labor cost in Indonesia, the agency noted.

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