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.