FITCH AFFIRMS CHANDRA ASRI AT BB- 26 May 2020 IQPlus, (26/05) - Fitch Ratings has affirmed PT Chandra Asri Petrochemical Tbk's (CAP) Long-Term Issuer Default Rating (IDR) at 'BB-'. The Outlook is Stable. The agency also affirmed CAP's senior unsecured US dollar bond at 'BB-' CAP's ratings reflect its moderate linkages with its dominant 46% shareholder, PT Barito Pacific Tbk (B+/Stable). Consequently, Fitch rates CAP based on the consolidated credit profile of Barito, based on our Parent and Subsidiary Rating Linkage criteria. We expect Barito's consolidated financial profile to weaken in 2020 with consolidated funds from operations (FFO) net leverage rising to around 4.2x (2019: 3.1x) on weaker CAP earnings due to lower petchem price and volume assumptions. However, the profile should improve as we expect net leverage in 2021 to come down to 3.1x - below Fitch's negative rating trigger of 4.0x - as CAP's earnings improve. We continue to assess CAP's Standalone Credit Profile (SCP) at 'bb-', reflecting its leading market position, integrated operation, diverse product offering and strong financial profile. The SCP is constrained by CAP's asset-concentration risk and limited operating scale, compared with global chemical peers, and the cyclical nature of the petrochemical industry. CAP also has financial flexibility on capex for its second petrochemical complex (CAP2) project. We expect a final investment decision (FID) on the CAP2 project to be taken in early to mid-2021 - we previously expected end-2020. (end)
