Rating firms worry about Indika bond buyback

SINGAPORE: An offer by Indonesian coal miner PT Indika Energy to buy back as much as a third of US$300mil of dollar bonds could be considered a distressed exchange, reduce the company’s liquidity as coal prices keep dropping and threaten its ratings, credit scorers said.

Singapore-based Fitch Ratings analyst Buddhika Piyasena said the proposed repurchase of the 2018 notes could add pressure to the company’s finances. On the same day, Moody’s Investors Service said it may downgrade the firm’s B2 credit score if the discount applied to the buyback was at the low end of what it had offered investors.