Moody's confirms Gajah Tunggal bonds

Moody's Investors Service said it has confirmed its B2 corporate family rating for PT Gajah Tunggal Tbk. and its B2 senior unsecured rating for GT 2005 Bonds BV's $325 million bonds guaranteed by the company.

The outlook is revised to negative.

Moody's said the confirmation of the B2 rating reflects Gajah Tunggal's dominant and competitive position in the Indonesian domestic tire market and its expansion into global markets, coupled with its low-cost structure compared with global peers.

These positive factors are offset by the company's comparatively small size on a global scale, high financial leverage and projected negative free cash flow.

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