S&P downgrades Matahari

S&P downgrades Matahari

SYDNEY (Reuters): Standard and Poor's Corp said yesterday that
it downgraded its rating on P.T. Matahari Putra Prima to CC from
CCC, with the rating remaining on creditwatch with negative
implications.

S&P said the downgrade was "the result of Matahari being
highly vulnerable to nonpayment of its outstanding debt
obligations".

"This rating action reflects deteriorating business conditions
for retailers in Indonesia, with sales down sharply as a result
of the currency devaluation, inflation, high interest rates, and
increasing unemployment," it said.

"Further, acute systemic problems in Indonesia's financial
sector have made it increasingly difficult for Matahari to obtain
essential working capital funding."

S&P said the company had come under financial stress by
relying on internal cash resources to fund its business and this
had reduced its ability to meet debt obligations in a timely
manner.