PEFINDO assigns “idAAA” and “idAAA(sy)” ratings for PT PLN’s proposed shelf-registered bond and sukuk

(August 19, 2020)--PEFINDO has assigned its “idAAA” rating to Perusahaan Perseroan (Persero) PT Perusahaan Listrik Negara (PPLN)’s proposed ShelfRegistered Bond IV/2020 of a maximum of IDR24.0 trillion, and its “idAAA(sy)” rating for the proposed Shelf-Registered Sukuk Ijarah IV/2020 of a maximum of IDR6.0 trillion, the proceeds of which will be used for electricity infrastructure investment. For the first phase, PPLN will issue Shelf-Registered Bond IV/2020 of a maximum of IDR1.5 trillion and Shelf-Registered Sukuk Ijarah IV/2020 of IDR500.0 billion. PEFINDO has also affirmed its “idAAA” ratings for PPLN and its bonds (VIII/2006 Seri B, IX/2007 Seri B, XII/2010 Seri B, Shelf-Registered Bond I/2013, Shelf-Registered Bond II/2017, and Shelf-Registered Bond III/2018), and the “idAAA(sy)” ratings for PPLN’s Sukuk Ijarah (V/2010 Seri B, Shelf-Registered I/2013, Shelf-Registered II/2017, and Shelf-Registered III/2018). The outlook for the corporate rating is “stable”.

An obligor rated idAAA has the highest rating assigned by PEFINDO. The obligor’s capacity to meet its long-term financial commitment, relative to that of other Indonesian obligors, is superior.

The suffix (sy) indicates the rating mandates Islamic principles compliant.

The corporate rating reflects PPLN’s strong and proven support from the Indonesian government, its strong financial flexibility, its superior market position, and the growing domestic demand for electricity in the medium term. The rating is constrained by its capital structure and cash flow protection measures, which will remain aggressive to support its significant capital expenditure (capex) plan.

We are of the view that the prolonged coronavirus disease 2019 (COVID-19) pandemic will result in slower economic growth, which could directly hit PPLN’s revenue growth in the near term. However, we do not expect the government to reduce its support for PPLN.

The rating could be lowered if PEFINDO views a material reduction in government support.

PPLN is a wholly owned state company engaged in the generation, transmission, and distribution of electricity throughout the country. It is the only integrated electricity producer in Indonesia, with an installed capacity of 45,804 megawatts (MW) (including rental) at the end of March 2020. (ends)