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Bond Market News
Indofood Upgraded to Baa2 by Moody’s
December 2, 2024
Indofood CBP and its senior unsecured debt was upgraded by a notch to Baa2 from Baa3 by Moody’s. The upgrade reflects financial prudence exhibited by the company since its debt-funded acquisition of Pinehill in 2020, leading to improvement in its credit metrics over the past four years. This improvement is driven by earnings growth and a strong cash position, without aggressive shareholder returns or large acquisitions. According to Moody’s, the company’s earnings are expected to continue growing, with EBITDA projected to rise to IDR 18-19tn ($1.13-1.19bn) by 2025 and leverage decreasing, with debt-to-EBITDA expected to fall to 2.2-2.4x from 2.6x in 2023. Indofood enjoys strong liquidity, with sufficient cash flows to cover capital expenditures and dividends until 2026. Its substantial cash reserves and long-term debt maturity profile provides additional financial flexibility.
Its dollar bonds are trading positive with its 4.745% 2051s up at 84.7 cents on the dollar, yielding 5.89%.
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