Conglomerate-Owned Company Hary Tanoesoedibjo Receives IdBB Rating From Pefindo: Its Bonds Have Stable Prospects

JAKARTA - PT Pemeringkat Efek Indonesia (Pefindo) affirmed the idBBB ratings for PT MNC Kapital Indonesia Tbk (BCAP) and the Phase I Shelf Registration Bond II 2018 with a stable outlook.

Pefindo, in a written statement quoted on Wednesday, March 17, explained that the rating has sufficient capability compared to other obligors to meet its long-term commitments. In addition, the ratings also reflect above average capitalization, as well as adequate liquidity and financial flexibility.

However, the ratings are limited by indirect access to the operating cash flow of the subsidiary owned by conglomerate Hary Tanoesoedibjo, the implementation of synergies with the group that is still running and volatility in the capital market.

"The rating will be raised if there is a significant and consistent strengthening of the company's business profile through its subsidiaries. On the other hand, the rating could be lowered if the company's cash flow weakens due to a decline in the credit profile of its subsidiaries," explained Pefindo.

Pefindo estimates that the pandemic will have a moderate impact on MNC Kapital's credit profile because it is supported by liquidity. The company owned by the 33rd richest person in Indonesia also has enough unused credit facilities worth IDR 2.1 trillion in September 2020 and business diversification.

It is likely that the support from the MNC Group can mitigate the potential risks arising from the substantial weakness of the subsidiaries' businesses in the bank, capital market and finance businesses during the pandemic.

For information, MNC Kapital is an investment holding company which currently has 9 subsidiaries engaged in banking, securities, investment management, consumer financing, lease financing, life insurance, general insurance, property rental services, and financial technology companies.

As of September 2020, 53.97 percent of the company's shares were owned by PT MNC Investama Tbk, Jalan Pantai Limited 9.91 percent, UOB Kay Hian Ltd 9.00 percent, HT Investment Development Ltd 8.59 percent, individuals who were members of management 0.28 percent, and the public 18.25 percent.