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Analysts have questioned the ability of the country’s largest coal producer, PT Bumi Resources, to put up the necessary collateral to back a possible issue of $500 million in dollar-denominated senior secured notes following reports that the company was considering such a move in the near future.

“While it is being reported that the notes will be secured, two of Bumi’s main assets, its 65 percent stake in KPC [Kaltim Prima Coal] and 70 percent stake in Arutmin [Indonesia], have already been pledged to cover its $1.9 billion debt to China Investment Corporation. So Bumi doesn’t have many quality assets left,” said Ricardo Silaen, an analyst at PT Kim Eng Securities, in the brokerage’s daily update on Monday.

Ricardo said Bumi did not have any other assets “that are as good as KPC and Arutmin.”

Sylvia Darmaji, an analyst at PT Ciptadana Sekuritas, echoed Ricardo’s comments, saying Bumi was rapidly running out of assets to pledge.

“It would be quite impossible for Bumi to pledge KPC and Arutmin as these have all been pledged for the CIC loan,” she said. “There is, of course, the possibility that Bumi may pledge other assets, such as its recently acquired stake in [Sydney-based] Herald Resources, but it’s a rather small possibility as Herald’s share price is falling, and its mine is still not operational.”

Ricardo said Bumi’s high degree of leverage, and the risks associated with it, was now excessive. Consequently, he rated the company as a “sell.”

Bumi may need to issue extra debt to finance its existing obligations in the form of share repurchase agreements, after the company’s share price fell more than 10 percent over two weeks.

Bumi has hired Credit Suisse Group and Deutsche Bank to arrange talks with investors in Hong Kong, Los Angeles, Singapore and Boston this week ahead of a dollar bond sale, according to a person familiar with the issue.

Bumi Capital, a wholly owned unit of Bumi Resources, would sell the fixed-rate senior notes and Bumi Resources would guarantee them, the person said.

Moody’s Investors Service ranks Bumi’s debt at Ba3, its third-highest non-investment grade rating. Standard & Poor’s ranks its bonds one level higher at BB.

Bumi shares ended up Rp 50, or 2.11 percent, to close at Rp 2,425 on Monday.