(The following statement was released by the rating agency)
Oct 05 - Fitch Ratings has assigned Indonesia-based PT Aneka Gas Industri’s (AGI) proposed IDR200bn secured bond and IDR300bn sukuk ijarah bond, both due in 2017, ‘A-(idn)’ ratings.
The ratings are in line with AGI’s National Long-Term rating of ‘A-(idn)', which has a Stable Outlook. The rating of the sukuk ijarah bond reflects Fitch’s view that the sukuk bond constitutes direct, unconditional, unsecured and general obligations of AGI. The sukuk bonds follow an “ijara” structure and, together with the secured bond, are similar to AGI’s IDR160bn Islamic bond and IDR80bn bond I issued in July 2008.
The proceeds of the issuance will primarily be used to fund the construction of two new air separation plants. The new air separation plants in Rungkut and Bitung will increase its annual production of oxygen, nitrogen, and argon by a total of approximately 50,000 metric cubic. The remaining proceeds will be used to repay the principal of its maturing bonds due in July 2013 and to finance working capital needs.
AGI’s ratings reflect its significant market share, improving scale and widespread distribution network. The company commands a 90% share in medical gas market and a 20% share of industrial gas market in Indonesia.
AGI’s low leverage and improved profitability have also been positively factored into the rating. Leverage as measured by net debt/EBITDA has remained below 3x since 2009 while EBITDA margin has improved to 26.7% in FY11 from 25% in FY09. The Stable Outlook is based on Fitch’s expectation that AGI will maintain strong credit metrics while undertaking the capacity expansion.
What would trigger a rating action?
Positive: Future developments that may, individually or collectively, lead to a positive rating action include:
-a decrease in net debt/EBITDA below 3x on a sustained basis
-an increase in EBITDA margin above 30% on a sustained basis
Negative: Future developments that may, individually or collectively, lead to a negative rating action include:
-an increase in net debt/EBITDA above 3.5x on a sustained basis
-unexpected delay to capex leading to cost overrun