S&P lowers APP unit rating

S&P lowers APP unit rating

JAKARTA (AFP): Standard and Poor's placed a default rating Tuesday on US$500 million in convertable bonds issued by a financing unit of pulp and paper group Asia Pulp and Paper after the company failed to make an interest payment.

The downgrade of the bonds issued by Asia Pulp and Paper Finance Mauritius Ltd. to D from CC was prompted by the company's failure to make a payment of $8.8 million due on April 30.

"With the standstill in all debt repayments, defaults will continue within the group over the near term," the international ratings agency said in a press statement.

"The interest payment is not expected to be made within its grace period of five business days as a result of the cessation of all group payments of interest and principal on outstanding debts," it added.

APP, owned by Indonesia's Sinar Mas group, said on March 13 it would cease payments of interest and principal on all debts including those of its subsidaries.

S and P also said it would lower to D the ratings on APP's operating subsidiaries, PT Indah Kiat Pulp and Paper Corp. Tbk, and PT Pabrik Kertas Tjiwi Kimia Tbk, if they fail to meet their interest principal payments on the due date.