Singapore, February 13, 2020 -- Moody's Investors Service has assigned a Baa2 rating to the proposed senior unsecured USD notes to be issued by Pertamina (Persero) (P.T.).

The notes will be issued under Pertamina's global medium-term note program, which is rated (P)Baa2, and the proceeds will be used for capital spending and general corporate purposes.

The ratings outlook is stable.

RATINGS RATIONALE

Pertamina's Baa2 issuer rating primarily reflects its standalone credit quality, as captured in its baa3 BCA.

The issuer rating reflects Pertamina's strategically important position as Indonesia's (Baa2 stable) national integrated oil and gas company, contributing significant upstream production, and accounting for substantially all of the country's refineries, fuel marketing stations and gas pipelines.

At the same time, the rating also takes into account Pertamina's exposure to an evolving regulatory environment in Indonesia, and a high degree of execution risk associated with its sizable investment plan.

The Baa2 issuer rating also incorporates Moody's expectation of the very high likelihood of extraordinary support from the Government of Indonesia to Pertamina in times of need, and very high interdependence between the two parties.

Moody's support assessment is based on Pertamina's strategic importance, given its important role in oil and gas exploration, petroleum product distribution and gas distribution in the country, as well as the government's close supervision of its strategies and budget.

"The rating incorporates our expectation that Pertamina will maintain credit metrics that are supportive of its ratings, despite the increase in working capital outflow, due to delayed subsidy reimbursement and higher capital spending," says Vikas Halan, a Moody's Senior Vice President.