PEFINDO: PT Jasamarga Pandaan Toll rated “idA+” with stable outlook

(October 13, 2020)-- PEFINDO has affirmed its rating for PT Jasamarga Pandaan Tol (Jasamarga Pandaan) at “idA+” and JPTR’s Sukuk Ijarah Year 2019 at “idA+(sy)”. The outlook for the Company’s corporate rating is “stable”.

An obligor rated idA has a strong capacity to meet its long-term financial commitments relative to that of other Indonesian obligors.

However, the obligor is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated obligors. The plus (+) sign indicates that the rating is relatively strong within the respective rating category.

The suffix (sy) means the rating mandates compliance with Islamic principles.

The corporate rating reflects very strong support from PT Jasa Marga (Persero) Tbk (Jasa Marga) (JSMR, idAA-/Stable). The rating also reflects the good economy of the Company’s service area, and its cash basis revenue stream with strong EBITDA margin. However, the rating is constrained by JPTR’s high financial leverage and vulnerability to traffic volume volatility on a single toll road asset.

The likelihood of a rating upgrade in the near term is limited, in our view. However, the rating may be raised if there is evidence of stronger degree of support from Jasa Marga. The rating could also be raised if Jasa Marga’s rating is raised as result of sustained improvement in capital structure and cash flow protection measures, and supported by higher-than-expected cash flow from the toll road operation as a result of regular tariff adjustments every two years and a significant and sustainable increase in traffic volume. However, the rating will be lowered if we view a reduction in level of support from Jasa Marga, or if Jasa Marga’s rating is lowered. The rating could also be under pressure if the Company’s capital structure and cash flow protection measures weaken as a result of low traffic volume from a prolonged COVID-19 pandemic, a lower-than-expected toll tariff adjustment, and/or higher costs than estimated. We could also lower the rating if the Company exceeds debt projections, as we do not expect it to incur any additional debt with no toll road development planned in the next five years.

Established on September 25, 1996, Jasamarga Pandaan operates the Gempol-Pandaan toll road, comprising a 12.05-kilometer (km) Tranche I operating since June 12, 2015, and a 1.56 km Tranche II since May 13, 2019, when the Pandaan-Malang toll road began operating. Its concession agreement with the Indonesian Toll Road Authority runs until October 3, 2049. It is a subsidiary of Jasa Marga, the leading toll road operator in Indonesia with 40 years of experience. In April 2019, JPTR exercised a rights issue through the KIKDINFRA issuance, resulting in the entry of a new shareholder and a reduced stake for Jasa Marga, which has the option to gradually buy back shares over the next five years. At the end of June 2020, the Company’s shareholders were Jasa Marga (40%), PT Trans Optima Luhur (53.8%), and PT Jalan Tol Kabupaten Pasuruan (6.2%). (ends)