Fitch: Golden Agri unchanged

Fitch Ratings said that Golden Agri Resources Ltd.'s leverage will increase as a result of its planned issue of $400 million 2017 convertible bonds, but should remain manageable over the next two years.

Fitch said it is of the view that the proposed bonds will not impact the ratings of the company's Indonesian plantation subsidiaries, which are driven by their strong linkage to Golden Agri.

The bond issue will weaken the company's funds from operation adjusted leverage to 2x by the end of 2012 and 3.4x in 2013 from 1.5x in 2011, based on declining crude palm oil price assumptions, the agency said.

While this is higher than Fitch's negative rating trigger of 2.5x, the agency said it believes FFO-adjusted leverage will gradually improve below 2.5x in 2014 as free cash flow is used to meet scheduled debt amortizations.

The company's subsidiaries include PT Sinar Mas Agro Resources and Technology Tbk., which has a national long-term rating of AA(idn) with a stable outlook; PT Ivo Mas Tunggal, which has a national long-term rating of AA(idn) with stable outlook; and PT Sawit Mas Sejahtera, which has a national long-term rating of AA(idn) and a stable outlook.

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