Fitch assigns A+(idn) to Sritex notes

Fitch Ratings Indonesia said it assigned PT Sri Rejeki Isman Tbk.'s (Sritex, BB-/A+(idn)/stable) proposed dollar-denominated domestic medium-term notes due in 2020 a national long-term rating of A+(idn).

The company expects to use the proceeds to refinance its bank debt.

Fitch said the ratings reflect Sritex's profile as Indonesia's largest integrated fabric and garment manufacturer, its increasing operating cash flows, and its moderate financial profile.

The agency expects Sritex to reduce its leverage (defined as net adjusted debt/EBITDAR) to around 3 times by end-2017, from 3.9 times at end-2016, as it completes its new production capacity.

Leverage was still high at 3.7 times at end-1H17 because of an increase in working capital associated with a production bottleneck in its finished-fabrics division. This has since normalized and Fitch said it expects the new capacity to be fully operational by the year's end.

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