Indah Kiat bonds get B-plus rating

Indah Kiat bonds get B-plus rating

SYDNEY (Reuter): Standard and Poor's Corp said on Tuesday it had assigned its B-plus long term rating to the 370 million yen guaranteed samurai bonds due March 2000 issued by Indah Kiat International Finance Co B.V., a subsidiary of PT Indah Kiat Pulp and Paper Corp.

The outlook for the rating was stable, S&P said.

"The B plus rating reflects the unsecured guarantee by Indah Kiat, which has issued mostly secured debt previously," S&P said. S&P also said it had affirmed the BB rating on Indah Kiat's secured debt.

"This rating reflects Indah Kiat's very competitive pulp operations built on low-cost fiber and labor resources, its quite stable market position in the strongly growing Indonesian and regional Asian economy, its efficient operating plant and a high level of operational integration within the APP group," S&P said. Indah Kiat is majority-owned by Asia Pulp and Paper Co (APP).

"The rating outlook is stable," S&P said.

"Global pulp and paper demand fundamentals should remain favorable for producers over the medium term, though prices have dramatically retreated from cyclical peaks over the past several months," S&P said.

"While substantial operating cash flow will continue to be generated by Indah Kiat and the APP group, cash flow is substantially committed to a range of incremental capacity additions throughout the APP group," it said.