Moody's rates Spindo notes B2

Moody's Investors Service said it assigned a first-time B2 corporate family rating to Steel Pipe Industry of Indonesia Tbk. (Spindo).

Moody's also said it assigned a B2 rating to the proposed senior notes due 2022.

The notes will be issued by Spindo's wholly owned subsidiary, Spindo BV, and guaranteed by Spindo and its 90%-owned subsidiary, PT Spindo Engineering Industry, which together own substantially all assets of Spindo, the agency explained.

The outlook is stable.

The proceeds will be primarily used to repay existing indebtedness, Moody's said.

The ratings reflect Spindo's leading market position in the Indonesian steel pipe manufacturing industry, solid end-market diversification and success in passing steel price volatility to customers, the agency said.

The ratings also consider Spindo's small scale relative to rating peers, high working capital investment needs, volatility in quarterly gross margins and exposure to global and domestic steel price fluctuations, Moody's said.

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