Citra Marga Downgraded to CC by S&P.MELBOURNE, Australia--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/3/98--Standard & Poor's today downgraded the local currency and foreign currency ratings on P.T. Citra Marga Nusaphala Persada (CMNP) and its subsidiary Citra Marga Finance B.V. to double-'C' from triple-'C'-minus, reflecting the reluctance of CMNP to make interest payments on its US$175 million floating-rate notes (FRNs). While CMNP has adequate rupiah cash holdings to satisfy the obligation, a US$6.6 million interest payment due on June 15 remains unpaid. The ratings remain on Creditwatch with negative implications. CMNP currently has cash holdings of about 1.3 trillion rupiah (about US$87 million at an exchange rate of 15000 rupiah). Negotiations regarding a proposed payment schedule currently are underway with the trustee for the FRNs. Unless an agreement can be reached that is acceptable, noteholders are likely to enforce a default. This will in turn result in a cross default Cross Default A provisions in a bond indenture or loan agreement that puts the borrower in default if the borrower defaults on another obligation.Notes: This provides more security to the lender. You can think of this as an "out-clause" to the contract.Also known as cross acceleration. See also: Default, Default Risk, Indenture to the US$125 million 144A Eurobonds Eurobond A bond that is denominated in a different currency than the one of the country in which the bond is issued.Notes: A eurobond is usually categorized by the currency in which it is denominated, and is usually issued by an international syndicate. An example of a eurobond is a eurodollar bond, which is denominated in U.S. dollars and issued in Japan by an Australian company.
issued by CMNP. The next payment under the Eurobond is US$4.5 million
due on Aug. 20, 1998.Even if CMNP is able to satisfy the overdue and upcoming interest payments, its operating and financial environment has weakened severely. Increased fuel prices, spiraling inflation, and massive economic uncertainty have resulted in reduced traffic volumes on the Jakarta Intra Urban Tollway, CMNP's core asset. Traffic was down 12% for the first six months of 1998 from the same period last year, with March and May traffic numbers in particular affected by the civic disruption that proceeded the change in presidency. In addition, the focus on the investments of the family of the former President Soeharto Soeharto: see Suharto. has increased the political risk associated with the role of President Soeharto's daughter, Mrs. Siti Hardiyanti Rukamana, as founder and President Director of CMNP. In Standard & Poor's view, it is increasingly unlikely that CMNP will be able to fund the repayment of the FRNs in December 1998. The high degree of political and economic uncertainty and disruption to the domestic rupiah payments system Payments System Collective term for mechanisms (both paper-backed and electronic) for moving funds, payments and money among financial institutions throughout the nation. The Federal Reserve plays a major role in the nation's payments system through distribution of currency and coin, processing of checks, electronic transfer of funds and the operation of automated clearinghouses that transfer funds electronically among depository intitutions; various private will make it difficult for CMNP to
access domestic or international debt or equity markets.Standard & Poor's will continue to monitor the financial and economic situation as it develops in Indonesia, and more particularly any impacts on the creditworthiness of CMNP, Standard & Poor's said. -- CreditWire
CONTACT: Louise Griffiths, Melbourne (61) 3-9250-4563
Copyright 1998, Standard & Poor's Rating Services
For more information on criteria or subscriptions:
http://www.ratings.standardpoor.com
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion