Fitch rates Jababeka notes B+

Fitch Ratings said it assigned an expected B+ rating with a recovery rating of RR4 on PT Kawasan Industri Jababeka Tbk.'s proposed dollar-denominated senior unsecured notes due in 2023.

The notes will be issued by Jababeka's wholly owned subsidiary, Jababeka International BV and guaranteed by Jababeka and certain subsidiaries, Fitch said.

The new 2023 notes will be used to exchange Jababeka's existing $260 million 7˝% notes due in 2019.

Jababeka also is seeking consent of the 2019 note holders who participate in the exchange for the removal of substantially all of the restrictive covenants, all of the reporting requirements and certain of the events of default in the residual 2019 notes, Fitch said.

The agency said it believes the exchange and removal of restrictive covenants of the 2019 notes will not affect surviving 2019 bondholders.

The proposed 2023 notes will include all the restrictive covenants Jababeka is seeking to remove from the 2019 notes, the agency added.

The surviving 2019 bondholders also will continue to benefit from the cross-acceleration clause in the 2019 notes, Fitch said.

The agency said it believes Jababeka's financial profile will be unchanged and consistent with its ratings as the new notes will be used mainly for refinancing and to extend the maturity profile of the company's debt, allowing it more flexibility to manage cash flows, the agency explained.

The company’s ratings reflect strong recurring interest coverage from its 130 megawatt power plant, which is operated under a 20-year power purchase agreement with the state electricity company, PT Perusahaan Listrik Negara (Persero), Fitch said.

This business provides earnings visibility and a natural hedge for Jababeka's dollar-denominated borrowings as it operates under a cost pass-through mechanism and revenues are pegged to U.S. dollars, the agency said.

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