S&P upgrades Polysindo rating to 'BB'

S&P upgrades Polysindo rating to 'BB'

JAKARTA (JP): Standard & Poor's raised its corporate rating on
PT Polysindo Eka Perkasa (Polysindo) to 'BB' from "BB minus' and
took the rating off its CreditWatch list.

The Melbourne office of the international rating agency
announced yesterday that the rating on the US$260 million senior
secured notes issued by Polysindo International Finance Co. B.V.,
guaranteed by parent company Polysindo, was also raised to 'BB'
from 'BB minus'.

It said, however, that the rating on the remaining unsecured
notes due in 2001 was downgraded to 'B plus'.

Polysindo is close to completing the first stage of a major
upgrade in its petrochemical production capability.

The upgrade will provide a manufacturing capacity for purified
terephthalic acid (PTA, the major raw material in polyester) and
substantially increase its production of polymer and polyester
chip feedstock for the company's expanded, staple-fiber
production facilities.

Funding for the initial stages of the $615-million expansion
program came from the company's operating cash flow and debt, the
rating agency said.

An increasing portion of the group's debt is secured by major
project assets. Existing investors in the group's $125 million
global note issue were offered an exchange which would
effectively secure the borrowings against the major project
assets.

"A high portion of bondholders have consented to the exchange.
However, a small proportion of bonds remain unsecured, and the
rating of these obligations has been downgraded to 'B+',
representing a two-notch differential from the secured rating,"
the rating agency said.

The 'BB' rating assigned to Polysindo reflects the prospective
integration of the company's petrochemical production facilities
with its established position in the polyester fiber sector, the
agency said. (hen)