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Fitch Cuts Berlian’s Credit Rating
Francezka Nangoy | December 13, 2011

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Berlian Laju Tanker, an Indonesian listed shipping company, had its credit rating downgraded by Fitch Ratings, which cited its ability to repay its debts.

The agency downgraded Berlian’s long-term foreign-currency and rupiah denominated bond rating by one notch, from B- to CCC, which is seven steps below investment grade.

It also cut Berlian’s $400 million senior unsecured debt by one notch to CC from CCC. The debt will come due in 2014.

“The downgrades reflect Berlian’s heightened liquidity risk as it has yet to secure refinancing for the Rp 1,153 billion [$127 million] domestic bonds that are maturing in May and July 2012,” Fitch said in a report released on Tuesday.

It also said the company would have to maintain $75 million as cash balance to comply with its bank loan agreement. It had $105.7 million in cash and $88.9 million stashed in a mutual fund investment in September this year, according to Fitch.

“The agency estimates that these balances and projected operating cash flows are inadequate to repay the bonds falling due in 2012, especially in light of committed capital expenditure,” Fitch said.

“Limited unencumbered asset balance, $9 million as at the end of September 2011, makes refinancing a difficult proposition.”

Berlian had net income of $140.7 million in the first nine months, compared to a loss of $36.2 million in the same period last year.

After the Rp 1.15 trillion maturity in 2012, the company will face another $125 million debt that matures in February 2013 and $400 million due in May 2014.

It also has about $297.2 million in debts that need to be refinanced by next year to 2014. Further downgrades could happen if the company fails to pay its rupiah-based bonds by mid-2012.