Pulp producers' ratings upgrade

JAKARTA (JP): Local rating agency PT Pemeringkat Efek Indonesia (Pefindo) has upgraded the rating of rupiah bonds issued by three local pulp and paper producers from idA minus to idA.

Pefindo announced on Friday that it had improved the rating of both PT Pindo Deli Pulp & Paper Mills' Rp 200 billion bonds and PT Tjiwi Kimia's 200 billion bonds from idA minus to idA.

The rating agency said that it also assigned the same rating to bonds each worth Rp 1 trillion to be issued by PT Lontar Papyrus Pulp & Paper Industry and PT Pindo Deli Pulp and Paper Mills.

"The idA rating given to Pindo Deli reflects the latter's strong market position as a low-cost pulp and paper producer," the company said.

It said Pindo Deli had been able to boost its performance due to the support of its holding company, the highly integrated Asia Pulp & Paper Co. Ltd. Group.

Pindo Deli can also maintain its low-cost position with the support of its subsidiary, Lontar Papyrus, it added.

Pefindo said that as a parent company to Lontar Papryus, Pindo Deli had access to Lontar Papyrus' low-cost chipwood, labor and transportation facilities owing to the latter's proximity to raw material sources and end markets.

The rating company said the improvement of the ratings was also made partly due to supportive external factors to both Pindo Deli and Asia Pulp & Paper's operation.

Lontar Papyrus is a low-cost pulp producer and a key part of the vertically integrated Asia Pulp & Paper Co. Ltd. Group, the company said.

Pefindo said that when considering Lontar Papyrus' rating it had also taken into account the group's aggressive financial policy in funding expansion within the group.

The fact that Lontar Papyrus' pulp operation is well supported by the high degree of vertical integration within the group has resulted in the company's ability to compete both in local and overseas markets, the rating company said.

"With Lontar Papyrus' involvement in producing value-added products to support Asia Pulp & Paper Group's marketing and distribution network, the company is expected to further strengthen its market position," it added.

Pefindo said the third rating increase was extended to paper and chemical company PT Pabrik Kertas Tjiwi Kimia's Rp 200 billion bonds from idA minus to idA.

The rating agency also assigned the idA rating to Tjiwi Kimia's proposed Rp 1 trillion bonds.

"The ratings reflect Tjiwi Kimia's improved financial performance, sustainable low-cost position and sales flexibility in marketing its products worldwide," Pefindo said. (cst)