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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 Marga can refer to:
  • Marga (Indian Philosophy)
  • Marga, a commune in Caraş-Severin County, Romania
  • Magga, one of the Four Noble Truths, in Buddhism
  • Marga (Batak), a family name in Batak society
  • Efraín Abdiel Alveo a.k.a.
 Nusaphala Persada (CMNP CMNP Coastal and Marine National Park ) 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 Floating-rate note (FRN)

Note whose interest payment varies with short-term interest rates.


floating-rate note

An unsecured debt issue with an interest rate that is reset at specified intervals (usually every six months) according to a
 (FRNs). While CMNP has adequate rupiah ru·pi·ah  
n. pl. rupiah
See Table at currency.



[Hindi rupay, rupiy
 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 to the US$125 million 144A Eurobonds 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 OVERDUE. A bill, note, bond or other contract, for the payment of money at a particular day, when not paid upon the day, is overdue.
     2. The indorsement of a note or bill overdue, is equivalent to drawing a new bill payable at sight. 2 Conn. 419; 18 Pick.
 and upcoming interest payments, its operating and financial environment has weakened weak·en  
tr. & intr.v. weak·ened, weak·en·ing, weak·ens
To make or become weak or weaker.



weaken·er n.
 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 disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process.  that proceeded the change in presidency. In addition, the focus on the investments of the family of the former President Soeharto 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 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 Creditworthiness

The condition in which the risk of default on a debt obligation by that entity is deemed low.


Creditworthiness

Eligibility of an individual or firm to borrow money.
 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


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Publication:Business Wire
Article Type:Article
Geographic Code:9INDO
Date:Jul 2, 1998
Words:405
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