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)