S&P warns of defaults after Indonesia telecoms firm Trikomsel seeks debt restructuring

Visual from the company website

Rating agency Standard & Poor’s warned on Friday of potential defaults by Indonesian firms after mobile phone retailer PT Trikomsel Oke Tbk prepared to meet lenders to restructure around $155 million of debt.

Trikomsel said earlier this week it may restructure S$215 million in outstanding bonds, which S&P said would be the first of its kind in Singapore’s bond market since the global financial crisis.

Jakarta-based Trikomsel, which is 19.9 percent-owned by Japan’s SoftBank Group Corp, said the restructuring was necessary as the rupiah’s decline against the U.S. dollar and the slowdown in Indonesia’s economy had resulted in “substantially weakened earnings and significantly reduced cash flow”.

In a report, S&P said other companies are also facing “much eroded balance sheets at a time of slower growth (which) could trigger additional defaults or proactive debt restructuring over the next 12-18 months”.

“A default in Singapore’s local currency corporate bond market is so rare that investors will keenly watch the outcome of Trikomsel’s potential debt restructuring,” said S&P credit analyst Xavier Jean.

Several Indonesian firms are struggling with debt in an economy that is growing at its weakest in six years, and where unemployment is rising and consumer spending is falling.

A slump in global commodity prices has dealt an additional blow to resource firms, while the weak rupiah – the second-worst performing currency among emerging Asian markets this year – has made it harder for companies to service their U.S. dollar debt.

Instant noodle maker PT Indofood Sukses Makmur Tbk , which has about $1.2 billion of debt denominated in foreign currencies, has said it will hedge 20 percent of its net exposure.

“We would expect to see more debt restructurings and distressed asset sales down the road for Indonesia,” said Jacqueline Chan, Singapore-based partner at law firm Milbank, Tweed, Hadley & McCloy.

“It’s a perfect storm of factors at this point in time, both local and global. But I don’t think this will last forever.”

Also Read:

Indonesia’s Telkomsel collaborates with Trikomsel for handset bundling deals

SoftBank acquires 19.9% stake in Polaris owned Trikomsel in $120m deal, shares surge

Trikomsel and SingPost form JV to tap e-commerce opportunities in Indonesia

 

Reuters

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.