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Bond Market News
Medco Energi Upgraded to BB- by S&P
June 26, 2024
Medco Energi was upgraded by a notch to BB- from B+ by S&P. The rating agency also upgraded Medco’s senior unsecured notes by the same measure. The rating action reflects financial flexibility for Medco Energi due to its 20.92% equity stake in Amman Mineral Internasional Tbk with a current market value of $10bn. According to S&P, divesting a small stake in Amman Mineral has the capacity to materially improve Medco’s financial profile if the proceeds are used to repay debt. However, Medco Energi does not have any immediate plans to divest its stake. Favorable industry conditions over the past 18-24 months have allowed Medco to generate significant cash flows and repay its $850mn of debt, they said. S&P believes that oil and gas prices will continue to support the company’s credit metrics in 2024-2025 as well.
Medco’s 7.375% 2026s traded stable at 100.875, yielding 6.86%.
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