Moody’s cuts Wijaya Karya

Moody’s Investors Service said it downgraded the corporate family rating and senior unsecured bond rating of PT Wijaya Karya (Persero) Tbk. to Ba3 from Ba2.

“WIKA’s business has been severely impacted by the coronavirus pandemic, and we expect the supply chain disruptions and restrictions on construction work resulting from the lockdowns in Indonesia will delay the completion of all of WIKA’s projects. Consequently, we expect its leverage to peak to 9x-10x in 2020 and remain elevated at about 5.8x-6x through 2022,” said Nidhi Dhruv, a Moody’s vice president and senior analyst, in a press release.

Concurrently, Moody’s changed the outlook to negative from stable.

“The negative outlook reflects WIKA’s elevated leverage and weak liquidity amid an uncertain operating environment due to the protracted coronavirus outbreak. The company will also need to refinance debt maturities of Rp 5.6 trillion ($386 million) over the next six months, which include the Komodo bond maturing in January 2021,” added Dhruv, who is also Moody’s lead analyst for WIKA.

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