S&P rates Ongko notes BB

S&P rates Ongko notes BB

HONG KONG (Reuter): Standard and Poor's Corp said yesterday it has assigned a BB rating to the US$100 million 10.5 percent lease-backed notes due 2004 of Ongko International Finance Co BV.

The issuer is a Netherlands special purpose company.

S&P said the rating is based primarily on the issuer's interest in U.S. dollar rental payments from PT Bank Umum Nasional, an Indonesian bank in the PT Ongko Multicorpora group rated BB.

The rental payments by Bank Umum relate to bank properties owned by PT Bunas Grahapratama (Bunas Graha), an Indonesian special purpose corporation that also is a member of the PT Ongko Multicorpora group.

In addition, structural elements of the transaction protect the rental cash flows from interruption as a result of the insolvency of the transaction parties, S&P said.

The transaction is structured to take advantage of the BB rating of Bank Umum. The notes also will be guaranteed by PT Ongko Multicorpora, but S&P said it did not take the guarantee into consideration in the rating process because Ongko Multicorpora is unrated.

The rating does not address the ability of PT Ongko Multicorpora to pay a withholding tax gross-up if withholding tax is imposed on payments to noteholders.

The rating also does not address the ability of PT Ongko Multicorpora to purchase the notes if noteholders exercise their rights to put their notes back to the issuer if a put event occurs.

S&P said it is able to attribute the BB rating of Bank Umum to the notes because the rental cash flows are not likely to be affected by the insolvency of the transaction parties.

Both the issuer and Bunas Graha are structured to the highest degree possible under Netherlands and Indonesian law as special purpose, bankruptcy remote companies, S&P said.