Fitch affirms Bank Negara

Fitch Ratings said it affirmed PT Bank Negara (Persero) Tbk's long-term foreign- and local-currency issuer default ratings at BB-, PGN Euro Finance 2003 Ltd.'s $125 million notes due 2014 and $150 million notes due 2013, guaranteed by PGN and its subsidiaries, at BB- and national long-term rating at AA(idn).

The outlook has been revised to positive from stable.

The outlook revision reflects Fitch's expectation that completion of the South Sumatera-West Java pipeline project is likely to result in higher gas distribution volumes, leading to improved revenue and leverage ratios, Fitch said.

The ratings are supported by its dominant position in the gas distribution and transmission businesses in Indonesia, the agency said.

Fitch said securing the gas supply to meet future increases in gas demand will be a key challenge. The rating also is constrained by Persero's aggressive capital expenditure, totaling about $268 million in 2008, the agency said. Fitch said its net debt-to-EBITDA ratio will likely decline to between 2.0x and 2.2x in 2008.

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