PEFINDO affirms “idAAA” ratings for PT Angkasa Pura I (Persero) and its bonds, outlook revised to negative

(May 20, 2020)-- PEFINDO has affirmed its “idAAA” rating for PT Angkasa Pura I (Persero) (APAI). We have also affirmed our “idAAA” rating for APAI’s Bond I Year 2016 and “idAAA(sy)” rating for its Sukuk Ijarah I Year 2016. However, we revised the outlook for the corporate rating to “negative” from “stable” to anticipate lower revenue in the near term due to the Coronavirus Disease (COVID-19) pandemic, which took a severe toll on consumer’s willingness to travel, and the implementation of Transportation Ministry Regulation No. 25/2020, which temporarily restrict passenger travel, including traveling by air transportation, from April 24, 2020to June 1, 2020. At the end of the first  quarter of  2020  (1Q2020),  most  countries  have  implemented  the  lockdown  policy  as  a  containment  measure, which  inevitably impacted the airport industry. We are of the view that the pandemic will negatively impact APAI’s operating cash flows in the near term due to the lower revenue and the significant portion of fixed operating expenses. Our projection assumes significant cash inflow drops in 2020, while we expect the APAI’s performance to improve gradually starting in 2021.Weare also of the view that it will likely depend on debt to finance its working capital during this pandemic. It is currently implementing operating expense efficiency strategies and proposing to its main banks to broaden the purpose of its unused investment loan to finance its working capital and to reschedule the interest payments. We will keep monitoring the COVID-19 pandemic impact on the Company’s performance and the government support to APAI during the pandemic.

Anobligor 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) means the rating mandates compliance with Islamic principles.

The corporate rating reflects strong government support for APAI due to the critical role of airports, a strong competitive advantage from its economy of service area, and a well-diversified revenue. The rating is constrained by its high financial leverage in the near to medium term.

The rating will be lowered if the industry's unfavorable conditions remain longer than expected and the government support during the COVID-19 pandemic is lower than expected. The rating could also be lowered if PEFINDO views a reduction in government support, such as through a material divestment of ownership. The outlook could be revised to stable if the APAI’s revenue starts to recover and records positive growth month-over-month on a sustained basis.

A state-owned enterprise(SOE) engaged in airport and airport-related services in the central and eastern regions of Indonesia, APAI operates  15airports,  including I  Gusti  Ngurah  Rai  International Airport  in Bali,  Juanda International  Airport  in  Surabaya,  Sultan Hasanuddin  International  Airport  in  Makassar,  Sultan  Aji  Muhammad  Sulaiman  Sepinggan  International  Airport  in  Balikpapan, Yogyakarta  International  Airport in Kulonprogo,  and  International  Sentani  Airport  in  Jayapura. It  was  fully  owned  by Indonesian government as of March 31, 2020. (ends)