Pefindo cuts credit ratings of 16 listed firms
Pefindo cuts credit ratings of 16 listed firms
JAKARTA (JP): The country's only rating agency, PT Pemeringkat
Efek Indonesia (Pefindo), announced yesterday that it had cut the
credit ratings of 16 publicly listed companies due to a decline
in their business performance.
Pefindo's president, Farid Harianto, told a news conference
yesterday that the rating company had also put the credit ratings
of 26 other listed companies on an alert list for the same
reason.
"The rating adjustments were made after a re-evaluation of
their latest financial performances," Farid said, adding that the
sharp drop in the rupiah against the dollar had lowered profit
projections of most listed companies.
He refused to mention the names of any companies whose ratings
had been downgraded.
The agency's re-evaluations showed that the impact of the
crisis varied across many industrial sectors and had affected
many corporations.
Farid said the rupiah's fall and the sharp rise in domestic
interest rates would hamper companies with high leverage and
large unhedged foreign currency exposures.
"And companies which do not have any preferential access to
liquidity will face problems too," he said.
Property, banking and finance companies would see profits
deteriorate and have the biggest cash flow problems this year.
"Pefindo has lowered 10 property companies' ratings," he said.
He said many property companies had had their ratings' lowered
because most property companies financed their rapid expansion
with unhedged offshore borrowings.
"Besides that, the high-interest rate environment has a
negative impact on the demand for residential housing and
escalates the costs of property under development," Farid said.
The currency crisis had also caused the overall asset quality
of the banking and financial sectors to deteriorate sharply.
As a result, he said, Pefindo placed most banking and other
financial companies on the alert list with negative implications
because most of these banks' borrowers did not have a adequate
means to repay their loans.
"The rupiah's depreciation and the higher interest rates will
undoubtedly result in an increase of non-performing loans," he
said.
"The adverse impact of the crisis on the property sector is
also expected to flow through the banking sector which has an
estimated one fifth of its loan portfolio exposed to property
companies," he said.
Farid, however, said that companies which exported most of
their products and had a strong financial structure would not be
adversely affected by the currency crisis.
"The currency crisis is like a windfall profit for these
companies as their dollar-denominated debts are hedged
naturally," he said.
Companies in this category include PT Barito Pacific Timber,
the Sinar Mas Group, PT Riau Andalan Pulp & Paper and agro-based
industries like Davomas Abadi, Fiskar Agung and Astra Agro Niaga,
he said. (aly)