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Sritex rating unaffected by senior note retap
Standard & Poorâs Ratings Services said on Fridaythat Sri Rejeki Ismanâs (Sritex) retap of its US-dollar-denominated seniorunsecured notes would not affect the âBB-â issue rating and âaxBB+â ASEAN regional scalerating on the notes
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S
tandard & Poor's Ratings Services said on Fridaythat Sri Rejeki Isman's (Sritex) retap of its US-dollar-denominated seniorunsecured notes would not affect the 'BB-' issue rating and 'axBB+' ASEAN regional scalerating on the notes.
Sritex guarantees the notes issued by its special-purpose vehicle, Golden Legacy Pte. Ltd. The note retap also does not affect the corporate credit rating on Sritex.
Sritex announced its intention to add to the US$200 million, 9 percent notes, maturing April 2019, under the same terms and conditions. 'We expect the company to use the proceeds to fund its capital expenditures and for general corporate purposes.
The issue rating is the same as the long-term corporate credit rating on Sritex,' the rating agency said in a statement.
The retap would help fund the company's capital expenditure for next year and should enhance the company's future cash-flow generation but affected its leverage in the next 12-18 months, the agency said. 'We expect Sritex's ratio of adjusted funds from operations [FFO] to debt will be 15 percent-20 percent over the next two years.
This is below our initial base case of 20 percent but still within our expectations for the rating,' it said.
'After the notes retap, we believe the company has very limited cushion in its financial ratios. Further addition to debt or lower-than-expected cash flow could trigger a rating downgrade,' the agency said.
A downside scenario for the ratings could materialize if the company's FFO-to-debt ratio slipped below 15 percent, S&P said.
