Fitch lowers WIKA view to negative

Fitch Ratings said it revised PT Wijaya Karya (Persero) Tbk.'s (WIKA) outlook to negative from stable.

The agency also said it affirmed the company's long-term issuer default rating at BB.

Fitch also said it revised the outlook on the national long-term rating to negative from stable and affirmed the rating at AA(idn).

The outlook revision reflects risks that WIKA's financial profile will weaken due to potential investments in further government infrastructure projects, the agency explained.

The company's leverage, measured by net adjusted debt-to- adjusted EBITDA, could increase to higher than 2x, the level at which would prompt a negative rating action, Fitch said.

Pressure on the financial profile in the medium- to long-term may be alleviated by improving cash flow generation, driven by robust order-book growth, the agency said.

WIKA's ratings also incorporate a two-notch uplift from its standalone credit profile of B+/A+(idn) to reflect an expectation of exceptional support from its parent, the government of Indonesia, if needed, Fitch added.

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