Moody's: Kaltim Prima Coal note Ba2

Moody's Investors Service said it assigned a Ba2 foreign currency secured debt rating to PT Kaltim Prima Coal's 2.5-year secured bank debt of up to $385 million.

The outlook is stable.

The proceeds of the secured bank debt will be used primarily to refinance existing debt.

At the same time, Moody's said it assigned the company a Ba2 local currency senior implied rating and downgraded its local currency issuer rating to Ba3 from Ba2 with a positive outlook. The rating adjustment to the Ba3 local currency issuer rating reflects the risk of legal subordination to the secured bank debt.

Moody's has also withdrawn Kaltim Prima Coal's Ba3 foreign currency unsecured debt rating following the company's decision not to proceed with a planned U.S. dollar bond issuance.

The Ba2 foreign currency secured debt rating reflects the rating agency's view that the facility will primarily be supported by the company's operating cash flow with a waterfall structure prioritizing loan repayments. Furthermore, the underlying security includes the assignment of sales contracts - of which over 90% are generated overseas with receipts in U.S. dollars - and the buyers of these sales will be given irrevocable payment instructions to pay directly to offshore-held accounts pledged to the secured lenders.

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