S&P downgrades ratings of 3 firms

S&P downgrades ratings of 3 firms

JAKARTA (JP): Standard & Poor's (S&P) announced yesterday it
had downgraded three Indonesian corporations' credit ratings
following the weakening of their credit quality and their ability
to meet short-term obligations.

The three companies downgraded were property developer PT
Mulialand, and petrochemical companies PT Polytama Propindo and
PT Tri Polyta Indonesia.

The Melbourne branch of the U.S. rating agency said in a
statement that it downgraded PT Mulialand's corporate credit
rating to BB+ from BBB-, reflecting the difficulties the company
was facing in settling with the remaining 37 percent of buyers in
Taman Anggrek Condominiums (TAC).

TAC's delays have been caused by the rapid depreciation of the
rupiah against the U.S. dollar and by high local interest rates.

The agency said with the project's final payments not being
successfully collected within the anticipated timeframe and with
weaker property sales conditions -- Mulialand would be burdened
by higher debt levels and weaker operating cash.

The corporate credit rating of PT Polytama Propindo (Polytama)
was also lowered to B- from B+ while the rating on Polytama
International Finance B.V.'s US$200 million secured notes due in
2007 -- guaranteed by Polytama -- was downgraded to B- from B+.

The agency said the ratings were placed on the agency's credit
watch with "negative implications" -- reflecting the company's
uncertainty to meet its debt-servicing obligations in the next
six months as a result of deteriorating cash flows and weak
liquidity.

A material decrease in Polytama's cash balance and liquidity
could lead to a lower ranking in the near future, the agency
said.

Longer-term concerns include the company's worsening leverage
as it takes on more debt to finance the construction of its
Polytama II project, it added.

Publicly listed PT Tri Polyta Indonesia's corporate credit
rating and the rating on Tri Polyta Finance B.V.'s $185 million
guaranteed secured notes due in 2003, were lowered to B from B+,
with a negative outlook.

The agency said the downgrading reflected a difficult and
competitive operating environment leading to a likely
deterioration of the company's operating cash flows and a
worsening leverage position.

The outlook reflected S&P's expectation of continuing weak
operating cash flows in the short and medium term for
nonintegrated polypropylene producers in the Asian region, which
could lead to a further deterioration of Tri Polyta's finances,
the agency said.

The agency also said it would continue to monitor the
portfolio of rated Indonesian corporations during the volatile
economic conditions.

The rapid fall of the rupiah against the U.S. dollar in recent
days, following four months of continued exchange rate
depreciation, "has exacerbated the credit quality and
profitability difficulties Indonesian corporations are facing,"
the agency said.

The tight liquidity of the Indonesian banking sector, the
subsequent high interest rates and an expectation that economic
growth will slow down in the near term, had also affected the
companies' ability to service their debts, it said.

S&P also affirmed the B- corporate credit banking of PT
Datakom Asia (Datakom), but revised its outlook from stable to
negative.

S&P affirmed the B- rating on $260 million in notes due in
2005, issued by Pratama Datakom Asia B.V. and guaranteed by
Datakom.

The agency said the rating reflected the company's de facto
pay-TV monopoly status in Indonesia, strong shareholder support,
and close relationship with Star TV.

These strengths were offset by the uncertainty of demand for
pay TV services in Indonesia and the company's heavy debt usage,
the agency said.

The negative outlook reflected Datakom's deteriorating
business and financial profile in the long term, it added.

The agency said that Datakom largely relied on its local
currency denominated subscription fees for generated cash flow,
while the majority of its borrowings and programming costs were
denominated in U.S. dollars.

The severe devaluation of the rupiah and expected economic
slowdown in Indonesia had significantly increased Datakom's cost
base and debt service burden and would impede its ability to
generate positive cash flow in the next three years by driving up
the subscriber break-even point, it said.

Moody's Investor Service said that it had also downgraded the
rating on the $185 million guaranteed secured notes of PT Tri
Polyta International Finance Company B.V. Indonesia to Caa1 from
B3.

The notes are guaranteed by PT Tri Polyta Indonesia Tbk.

The rating reflected the severe margin squeeze that had
primarily resulted from high feedstock costs and low product
prices, which had been further aggravated by the sharp
depreciation of the rupiah against the dollar, Moody's said.
(gis)