Polysindo's debt ratings upgraded

JAKARTA (JP): Moody's Investors Service upgraded its rating on two guaranteed secured notes of Polysindo International Finance Company B.V. to Ba2 from Ba3 and its rating on the US$2.5 million senior notes of PT Polysindo Eka Perkasa to B1 from B2.

Moody's said in a statement here yesterday that the two notes of Polysindo Finance were $125 million guaranteed secured notes due in 2001 with an interest rate of 13 percent a year, and $260 million notes with an interest rate of 11.4 percent due in 2006.

It also assigned a Ba2 rating to the proposed issuance of $200 million guaranteed secured note of Polysindo Finance, a wholly- owned subsidiary of Polysindo Eka Perkasa, a unit of the Texmaco Group.

According to the statement, the rating actions recognized the successful completion of the new expansion plan by Polysindo Eka Perkasa, a vertically integrated chemical and textile manufacturer headquartered in Jakarta.

The company has now a greater emphasis on polyester fibers through the significant expansion of its existing polyster chip, fiber, weaving and finishing production capacity, the rating agency said.

Polysindo Eka Perkasa recently announced a new $800 million five-year expansion plan that would increase capacity to support its downstream production of yarn, fiber, and fabrics.

Moody's said that Polysindo's vertical integration strategy, combined with its flexible low-cost production facilities, and a low labor cost situation in Indonesia should enable the company to successfully compete in the export markets and sustain some cost advantages against Asian producers.

It said that the polyster fiber growth in Asia was mainly driven by the increasing polyester share of synthetic fibers, low per capita polyster textile consumption in Southeast Asia compared with Japan and the U.S., rationalization of the industry in Europe, and uncertainties in global cotton cultivation.

Currently, the industry is under pricing pressure, mainly driven by capacity growth in India, Indonesia, and South Korea.

According to Moody's, polyester fiber prices are close to the bottom of the cycle. (bnt)