Gajah Tunggal Slashed to CCC+ on Growing Refinancing Risks
S&P Global Ratings has lowered Gajah Tunggal Tbk’s (GJTL IJ) corporate rating to ‘CCC+’/Negative from ‘B-/Credit Watch’. The downgrade was driven by growing refinancing risk related to the company’s USD500Mn senior secured notes due in February 2018. Gajah Tunggal does not have a diverse pool of domestic and international banking relationships and has not borrowed long-dated debt from banks in the past few years. That said, the refinancing process could be complicated and would lead to protracted negotiations between the company and lenders. Nevertheless, issuing IDR bonds likely to remain insufficient to refinancing all USD maturing bond because domestic bond markets remains shallow, with average issuance size for non-financial companies generally below IDR1trn, which is less than 20% of the company’s refinancing requirements. In view of such obstacles and growing refinancing risk, S&P places the the company on negative outlook.
