CMNP gets BBB rating from Standard & Poor's

CMNP gets BBB rating from Standard & Poor's

JAKARTA (JP): Standard & Poor's has given a 'BBB' rating to
the proposed US$100 million notes to be issued by Citra Marga
Finance B.V. and guaranteed by toll road developer PT Citra Marga
Nusaphala Persada (CMNP).

The international rating agency announced yesterday the notes'
rating outlook was stable.

S&P said its rating was based on "the uncertainty over
potential projects involving the company, the refinancing risk of
a lumpy maturity profile and uncertainty on toll road policies in
Indonesia".

"The rating reflected the high demand for the construction of
the city's intra urban tollway and CMNP's strong cash flow
position," it added.

According to S&P, the company's major asset is a 30-year
concession to build, own and operate two sections of the city's
intra urban tollways, which reached about 85 percent of its
operating revenues last year.

At the same time, traffic on the tollways has increased around
15 percent per annum since 1990, although the future growth
levels are forecast to remain at eight percent per annum for
longer term, it said.

S&P said the solid growth was supported by the country's
dynamic economic growth of between 6.5 percent and 7.5 percent
per annum since 1990. In addition, the population in the greater
Jakarta increased at 3.6 percent per annum.

Noting the strong demand for the intra urban tollways, S&P
said the CMNP's revenue, which comes from a single asset, may be
exposed to some technical or engineering risks.

It also predicted the company's financial ratios would weaken
this year as a result of the debt incurred to fund the company's
current project, the Surabaya Eastern Ring Tollway development in
East Java.

S&P estimated the funds flow from operation net interest in
the next few years would fall between four to five times, which
would equal to 35 percent of this year's net debt, from nearly 10
times last year.

It also said the rising opportunities for new investors for
additional toll roads would affect CMNP's business profile.

In addition, the political uncertainty regarding the successor
of President Soeharto, whose eldest daughter Siti Hardiyanti
Rukmana controls the CMNP, will also raise the risk to refinance
the company, it said.

Meanwhile, the credit ratings corporation said the lack of
alternative routes in built-up urban areas could end up in the
government's granting concessions to operate toll roads in direct
competition with CNMP's existing concessions.

"Given the increasing level of investment in the sector, the
central government is likely to introduce a more transparent
pricing regime over the medium to longer term, the impact of
which to CMNP's financial profile is unknown," S&P said. (02)