TCRAP_Public/170802.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                      A S I A   P A C I F I C

            Wednesday, August 2, 2017, Vol. 20, No. 152



MACQUARIE GROUP: Fitch Revises Support Rating Floor to BB+
SPYDER BC: Moody's Assigns (P)B2 Corporate Family Rating


CHINA SOUTH: S&P Affirms 'B' CCR, Outlook Remains Negative
EHI CAR: Fitch Rates Proposed USD Notes 'BB-(EXP'
EHI CAR: S&P Affirms 'BB' CCR, Rates New US$ Notes 'BB-'
JIANGSU NANTONG: Moody's Assigns B2 Corporate Family Rating
JIANGSU NANTONG: S&P Assigns 'B-' CCR; Outlook Stable

POWERLONG REAL: Tap Bond Issue No Impact on Moody's B1 CFR


ADORN SPECIALITY: Ind-Ra Gives 'BB' Issuer Rating; Outlook Stable
DELHI INTERNATIONAL: S&P Affirms 'BB' CCR, Outlook Stable
EASTERN TRAVELS: Ind-Ra Gives 'BB' Issuer Rating; Outlook Stable
GREENKO ENERGY: Fitch Affirms B+ Long-Term IDR; Outlook Stable
LODHA DEVELOPERS: Fitch Puts 'B' IDR on Rating Watch Negative

SARVOTTAM ROLLING: Ind-Ra Gives BB Issuer Rating; Outlook Stable
SPACEAGE SWITCHGEARS: Ind-Ra Affirms BB- Long-Term Issuer Rating
VEDANTA RESOURCES: Moody's Rates Proposed Senior Unsec. Notes B3


GAJAH TUNGGAL: S&P Places CCC LT CCR on CreditWatch Developing
MEDCO ENERGI: Fitch Assigns B First-Time Long-Term IDR
MEDCO ENERGI: Moody's Assigns (P)B2 CFR; Outlook Stable
MEDCO ENERGI: S&P Assigns 'B' CCR; Stable Outlook
TUNAS BARU: Fitch Publishes BB- Long-Term Issuer Default Rating

                            - - - - -


MACQUARIE GROUP: Fitch Revises Support Rating Floor to BB+
Fitch Ratings has affirmed the ratings of Macquarie Group Limited
(MGL), Macquarie Financial Holdings Limited (MFHL) and Macquarie
International Finance Limited (MIFL). At the same time, the agency
has affirmed the Issuer Default Ratings (IDRs), Viability Rating
(VR) and Support Rating of Macquarie Bank Limited (MBL), while
revising its Support Rating Floor to 'BB+' from 'BB'.

The revision to MBL's Support Rating Floor reflects that it is the
only non-major bank in Australia that is subject to the
government's bank levy, which was introduced in the 2017/18 budget
in part to compensate the government for the implicit guarantee it
provides the banks subject to the levy. This implies a higher
likelihood of state support for MBL than Fitch had previously
factored into the rating.


MBL is the main operating subsidiary of the group and its IDRs, VR
and senior debt ratings reflect a strong risk-management
framework, sound liquidity, solid capitalisation and a diverse
business mix, both by type of business and geography. These
factors help to offset specialised operations outside Australia, a
greater risk appetite and earnings volatility relative to
Australian retail banks, and a high reliance on wholesale funding.

MGL is the non-operating holding company of the group and its
IDRs, VR and senior debt ratings are driven by similar factors.
However, the ratings are notched once from MBL's ratings to
recognise a higher risk profile. This in part stems from the focus
on the protection of bank depositors in prudential regulation in
Australia, and recognises that MGL has sizeable non-banking
operations, through MFHL, that are subject to lower regulatory
scrutiny. The capital markets businesses in the non-banking
operations also contribute to a greater level of earnings
volatility relative to MBL, while there is limited standalone
liquidity at the holding company.

MGL has a strong risk-management framework in place, which helps
to offset the group's higher risk appetite relative to domestic
retail bank peers. New products and businesses are tightly
controlled by a centralised risk management group and regular and
extensive stress testing is undertaken. The higher risk appetite
has manifested itself over the last five years in a number of
acquisitions and periodic strong organic growth in some parts of
the balance sheet. MGL is likely to remain an opportunistic
acquirer, although Fitch expects the funding and capital impact to
be offset through new capital and funding facilities being raised
specifically for each transaction - this has been the group's
approach historically.

Liquidity management at the operational entities is strong, which
helps offset a high reliance on wholesale funding. MGL's liquidity
risk appetite is set so that it is able to meet all of its
obligations over a 12-month period with no access to funding
markets, and a modest reduction in the group's core businesses.
MBL's liquidity risk appetite varies only in that it assumes
constrained access to funding markets rather than no access. MGL
held AUD22 billion of cash and liquid assets at the end of the
financial year to March 31, 2017 (FYE17), with AUD20 billion of
this held by MBL - these balances more than covered FY18 wholesale
debt maturities. In addition, MBL reported that its daily average
Basel III liquidity coverage ratio for 4QFY17 was 168%, and it has
indicated it will meet the minimum 100% net stable funding ratio
when it is implemented on January 1, 2018. Liquid assets are held
by the operating subsidiaries, leaving limited standalone
liquidity at the holding company.

Fitch expects both MGL and MBL to maintain solid capital buffers,
which help to counter the group's risk appetite. These buffers
should allow MBL to easily meet higher minimum regulatory capital
requirements which are to apply from 2020. The group held a
surplus of AUD5.5 billion over regulatory requirements at FYE17
(equivalent to 42% of the minimum requirement), while common
equity double leverage was low at 101%. Internal capital
generation has generally been sufficient to meet organic growth.
MBL's Fitch Core Capital ratio was 12.0% at FYE17, while its Basel
III leverage ratio calculated using the Australian regulator's
approach was 6.4%.

Fitch expects MGL's earnings to remain more volatile than that of
Australian retail banks due to the group's business mix. The
increase in lending and leasing activities, as well as asset
management, over the last decade have helped improve the stability
of the group's earnings. However, investment banking and other
market-oriented businesses remain a key part of MGL's franchise -
earnings from these businesses are reliant on market conditions.


MGL's Support Rating and Support Rating Floor reflect Fitch's view
that support from Australian authorities cannot be relied upon if
needed. The agency believes that if support were provided to the
group it would most likely be through the regulated bank, MBL.
MBL's Support Rating and Support Rating Floor reflect a moderate
probability of support, given its position as Australia's fifth-
largest bank by total assets, that it is the only non-major bank
that is subject to the Australian government's bank levy, and that
it is a key player in the domestic financial markets.


MBL's subordinated debt is notched once from its VR, which
includes zero notches for non-performance risk as this is already
captured by the VR, and one notch for loss severity.


MFHL is a core subsidiary of MGL, undertaking the group's non-
banking activities. Its IDRs are aligned with those of MGL. MIFL
is a strategically important subsidiary of MBL, providing finance
to Macquarie entities. Its IDRs are notched down once from those
of MBL.


A downgrade of MGL's and MBL's IDRs and VRs is likely if Fitch
observes a weakening of the group's robust risk-management
framework and solid approach to liquidity and capital as it would
leave both entities susceptible to increased market volatility.
Serious reputational issues could also result in negative rating
pressure. There is limited upside rating potential given the
group's specialised franchise outside Australia and the earnings
volatility inherent in the market-oriented operations.


MGL's Support Rating and Support Rating Floor are already at the
lowest level assigned by Fitch and so cannot be downgraded
further. An upgrade appears unlikely as it would require a change
in the regulatory focus in Australia from protection of bank
depositors to a broader focus on group regulation.

The Support Ratings and Support Rating Floors of MBL are sensitive
to any change in assumptions around the propensity or ability of
Australian authorities to provide timely support. No change to the
propensity of the authorities to provide support appears imminent,
although Australia's membership of the G20 could mean some
lessening of support in the medium term.

A change in the ability of the Australian authorities to provide
support, which is likely to be reflected in a downgrade of the
Australian sovereign (AAA/Stable), may also result in a downgrade
of MBL's Support Ratings and Support Rating Floors. Negative
action will not have a direct impact on MBL's IDRs, which are
currently driven by its VR.


The ratings of MBL's subordinated debt are sensitive to the same
factors that influence its VR.


Any change in the propensity and/or ability of the respective
parents to provide support to MFHL and MIFL is likely to result in
changes to each entity's IDRs and Support Rating.

The rating actions are:

Macquarie Group Limited (MGL):
- Long-Term IDR: affirmed at 'A-'; Outlook Stable;
- Short-Term IDR: affirmed at 'F2';
- Viability Rating: affirmed at 'a-';
- Support Rating: affirmed at '5;
- Support Rating Floor: affirmed at 'No Floor';
- Senior unsecured debt: affirmed at 'A-'; and
- Short-term debt: affirmed at 'F2'.

Macquarie Bank Limited (MBL):
- Long-Term IDR: affirmed at 'A'; Outlook Stable;
- Short-Term IDR: affirmed at 'F1';
- Viability Rating: affirmed at 'a';
- Support Rating: affirmed at '3';
- Support Rating Floor: revised to 'BB+' from 'BB';
- Senior unsecured debt: affirmed at 'A';
- Market linked securities: affirmed at 'A(emr)';
- Short-term debt: affirmed at 'F1'; and
- Subordinated debt: affirmed at 'A-'.

Macquarie Financial Holdings Pty Limited (MFHL):
- Long-Term IDR: affirmed at 'A-'; Outlook Stable;
- Short-Term IDR: affirmed at 'F2'; and
- Support Rating: affirmed at '1'.

Macquarie International Finance Limited (MIFL):
- Long-Term IDR: affirmed at 'A-'; Outlook Stable;
- Short-Term IDR: affirmed at 'F2'; and
- Support Rating: affirmed at '1'.

SPYDER BC: Moody's Assigns (P)B2 Corporate Family Rating
Moody's Investors Service has assigned a provisional corporate
family rating (CFR) of (P)B2 to Spyder (BC) BidCo Pty Ltd, which
will be the holding company of the combined Camp Australia Group.

At the same time, Moody's has assigned a provisional (P)B2 rating
to the group's proposed backed first lien senior secured term loan
facility of AUD300 million and the proposed backed first lien
senior secured revolving credit facility of AUD15 million. Moody's
has also assigned a provisional (P)B3 rating to the proposed
backed second lien senior secured term loan facility of AUD100
million. All of the credit facilities will be issued by Spyder
(BC) BidCo Pty Ltd.

The (P)B3 backed second lien senior secured rating is one notch
lower than the CFR, reflecting legal subordination as it will be
secured on a second-priority basis to Spyder (BC) BidCo Pty Ltd's
guaranteed first lien senior secured term loan facility and the
revolving credit facility.

The ratings are assigned on the basis that Camp Australia will
successfully merge with Junior Adventures Group ("JAG") to form
the combined Camp Australia Group. This is the first time that
Moody's has assigned ratings to Spyder (BC) BidCo Pty Ltd. The
outlook on the rating is stable.

The provisional corporate family, as well as the first lien and
second lien senior secured ratings, are based on Moody's review of
the draft documentation. Definitive ratings will be assigned upon
a satisfactory review of the final documentation and upon the
successful close of the transaction.


"The (P)B2 CFR reflects what will be the combined company's
leading position in the Australian Outside School Hours Care
(OSHC) sector; Camp Australia's track record of strong cash flow
generation, and its solid margins, as underpinned by its fully
integrated software platform," says Shawn Xiong, a Moody's

Moody's expects growth in Camp Australia Group's EBITDA and cash
flow generation to be driven by sustained demand for OSHC. Demand
growth expectations are supported by favourable demographic trends
as well as the Australian government's OSHC subsidy program.

However, the ratings are constrained by the company's relatively
high financial leverage, as measured by adjusted debt-to-EBITDA
immediately post-merger, and its relatively small absolute size.
Additionally, the company is exposed to an evolving regulatory
environment and regulatory risks. The ratings also incorporate the
execution risks related to realizing a significant level of post-
integration synergies.

"Moody's expects Camp Australia Group to grow its earnings,
maintain its solid margins, and apply its free cash flow to debt
reduction post-merger," adds Xiong.

Moody's expects adjusted debt-to-EBITDA for the combined entity to
be between 5.0 times and 5.5 times for FY2018 on a forecast basis.

The stable outlook reflects Moody's expectation that Camp
Australia Group will improve earnings through growth in the number
of its sites and realizing significant post-integration synergies.
It also reflects Moody's expectation that the Group will apply
free cash flow to debt reduction over the next two years.

An upward rating trend could emerge if Camp Australia Group
demonstrates an ability to realize the majority of its identified
post-integration synergies, continued EBITDA growth, and an
ongoing commitment to debt reduction.

The ratings could be upgraded if the Group reduces financial
leverage so that adjusted debt-to-EBITDA falls below 5.0 times
over the next 18 - 24 months. Robust positive free cash flow
generation and strong liquidity through the business cycle and
debt reduction would also be important for a higher rating.

Negative rating pressure could arise if a significant amount of
post-integration synergies fail to materialize and Moody's expects
significant earnings deterioration.

Metrics that Moody's will considers for a downgrade include
adjusted debt-to-EBITDA rising above 7.0 times over the next 18 -
24 months. Negative free cash flow generation, strained liquidity,
or actions that favour equity investors at the expense of
creditors could also pressure the ratings.

Camp Australia Group's liquidity is expected to remain solid over
the next 12-18 months, supported by cash balances of up to AUD45
million and consistent free cash flow generation. The company's
liquidity is further supported by an undrawn AUD15 million first
lien revolving credit facility. Moody's expects free cash flow to
be allocated to debt reduction.

The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.


CHINA SOUTH: S&P Affirms 'B' CCR, Outlook Remains Negative
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on China-based trade center developer China South City
Holdings Ltd. (CSC). The outlook is negative. S&P said, "At the
same time, we affirmed our 'B-' long-term issue rating on CSC's
outstanding senior unsecured notes.

"The rating affirmation reflects CSC's improved leverage and
interest coverage in the fiscal year ending March 2017 due to a
sales recovery driven by focusing on selling residential property
and debt control by the company. In our view, the company could
continue to improve its sales in the next 12 months and reach the
high end of HK$10 billion-HK$12 billion guidance range due to
favorable residential sales conditions in the tier-2 cities it
operates in. We also forecast CSC's recurring income will maintain
moderate growth, which will further contribute to improvement in
interest coverage.

"However, our outlook on the rating remains negative to reflect
our view that the fundamental weakness in the company's core
business of trade center development has not turned around. In
addition, we are also uncertain of the sustainability of the
company's reliance on residential property sales given its limited
residential land bank." Despite the company's large land bank of
over 38 million sq. meters of gross floor area (GFA), most of it
is for commercial use and sellable residential GFA is only
sufficient to sustain the current level of sales for about two
years. The company may face pressure to acquire new residential
land to maintain sales, leading to financial leverage remaining
elevated in the next one to two years.

Sales of commercial units in CSC's trade centers remain stagnant
in 2017. S&P said, "We believe it will be challenging for trade
center property sales to pick up meaningfully in the next two
years given the lack of positive impetus for economic activities
across tier-2 cities and the lengthy development cycle for CSC's
sites to mature.

"We also expect the company's liquidity to remain tight with
HK$8.4 billion of short-term debt and another HK$12 billion
maturing in the following year. Around 60% of CSC's debt is due in
less than 24 months. That said, we don't expect CSC to face
imminent refinancing risks in the next 12 months because of a
sufficient cash position, sound access to multiple funding
channels, and domestic issuance quota. CSC has better financial
access and more competitive funding costs relative to similarly
rated and similar scale property companies, in our view. This is
likely due to CSC's status as a trade center developer and
operator, rather than a residential property developer. In the
last fiscal year, the company issued domestic company bonds and
short-term notes, as well as senior U.S. dollar notes totaling
US$650 million.

"We expect CSC's profitability to decline in the next two years
due to a change in business mix and increasing land costs. The
company's sales are now around 80% residential units, which have
lower margins than commercial sales. In addition, the newly
acquired residential land has higher costs compared with its
historical commercial use land. The decline in margins could be
partly offset by the company's continued efforts to reduce
operating expenses and steadily grow its recurring income
business. We therefore expect its EBITDA margin to stay above 30%
in the next two years.

"We forecast CSC's recurring income business, which includes
rental, logistics and warehousing, e-commerce, outlet operations,
and property management to continue grow at 15%-20% a year as its
trade centers gradually matures. Excluding property management and
e-commerce, conventional recurring income covered just over 50% of
interest expenses in fiscal 2017 and we expect this ratio to
moderately grow in the next two years. Shenzhen will continue to
contribute to the bulk of recurring income while Zhengzhou, Hefei,
and Nanchang slowly ramp up their contributions.

"In addition, we believe CSC will continue to receive substantial
government subsidies, which benefit the company's income and cash
flow, provided it continues to develop its commercial trade
centers. In fiscal 2017, cash inflow from various forms of
government subsidies exceeded HK$2.4 billion, in which over HK$800
million is recognized as other income in the income statement and
the rest has been or will be deducted from the cost of goods sold
upon recognition of property sales. We have not factored the
HK$800 million in government grants in other income into our
EBITDA calculation as they are not contracted or guaranteed but we
believe this provides a degree of support for company's credit

"The negative outlook reflects our view that the operating
environment for CSC will remain tough in the next 12 months amid
weakness in trade center sales in China. We expect a mild recovery
in the company's contracted sales driven by residential

"We could revise the outlook to stable in the coming 12 months if
CSC materially improves its contracted sales and financial
performance resulting in EBITDA interest coverage improving toward
1.5x on a sustained basis and its debt-to-EBITDA ratio improving
significantly from current levels.

"We could lower the rating if CSC's leverage does not improve, or
worsens, from March 2017 levels, which may be due to weaker than
expected sales or more aggressive land acquisition than we expect.
We could also lower the rating if we believe that CSC's liquidity
position has become stressed, as indicated by challenges in
refinancing large short-term debt or a material rise in financing
costs. In addition, weaker than expected recurring income growth
or a drop in government subsidies could pressure the rating."

EHI CAR: Fitch Rates Proposed USD Notes 'BB-(EXP'
Fitch Ratings has assigned China-based car rental and services
operator eHi Car Services Limited's proposed US dollar-denominated
notes an expected rating of 'BB-(EXP)'. The proposed notes are
rated at the same level as eHi's senior unsecured rating as they
constitute its direct and senior unsecured obligations.

The final rating on the proposed US dollar notes is contingent
upon the receipt of final documents conforming to information
already received.

Fitch revised the Outlook on eHi's Long-Time Foreign-Currency
Issuer Default to Negative from Stable on July 3, 2017 to reflect
the company's higher leverage, ongoing capex requirements and
Fitch's expectation that deleveraging is not probable in the next
few years.


Higher Leverage: Fitch expects eHi's FFO adjusted net leverage to
remain above 3.0x over the next few years, even though the company
is starting to moderate its expansion and capex plans for 2017.
eHi's FFO adjusted net leverage rose sharply to 3.4x in 2016, from
just 0.8x at end-2015, due to higher-than-Fitch-expected net
capital expenditure for vehicle fleet expansion and despite strong
growth in EBITDA and FFO.

eHi plans to use a portion of the proceeds from the proposed note
issue for early repayment of its syndicated loan that has tight
covenants, which will give the company more financial flexibility.
Fitch expects management to continue to take a controlled approach
to capex and leverage in the next few years, although the ratings
may still come under downward pressure if FFO adjusted net
leverage is sustained above 3.0x.

National Expansion, Market Leader: eHi remains one of China's
leading car rental companies, with majority market share in
Shanghai and eastern China. Its total fleet size rose by 50% to
56,916 vehicles and total revenue increased by 45% to CNY2.1
billion in 2016. eHi also expanded its geographical footprint to
cover 216 cities. Fitch expects eHi to continue expanding and for
its fleet size to reach almost 67,000 vehicles by end-2017. The
company has also narrowed the gap between itself and the market
leader, CAR Inc. (BB-/Stable), over the previous two years, with
faster revenue and fleet expansion.

Competitive Pressure, Regulatory Risk: China's car rental and
services market continues to change rapidly. eHi faces fierce
competition, particularly from CAR Inc., which cut its prices at
the beginning of 2017. This has not directly affected eHi's
margins so far, but may pressure its pricing and profitability if
it continues. China's regulatory framework is also evolving and
some changes may adversely affect eHi's operations.


eHi has a smaller operating scale and weaker financial profile
than other Fitch-rated car rental operators, such as CAR Inc.,
China's largest car rental operator, and Localiza Rent a Car S.A.
(BB+/Negative), Brazil's leading rental car operator. However eHi
has lower concentration risk compared with CAR Inc., which is
exposed to one large customer. No Country Ceiling,
parent/subsidiary or operating environment aspects have an impact
on the rating.


Fitch's key assumptions within Fitch ratings case for the issuer
- 20,000 vehicles added and 10,000 vehicles disposed in 2017
- 37% revenue growth in 2017, then 4%-12% in 2018-2020 (2016:
- EBITDA margin of 45%-47% in 2017-2020 (2016: 44%)


Developments that May, Individually or Collectively, Lead to the
Outlook being revised to Stable
- FFO adjusted net leverage sustained below 3.0x (2016: 3.4x)
- EBITDA margin sustained above 50%

Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- FFO adjusted net leverage above 3.0x for a sustained period
- FFO fixed-charge coverage below 3.0x for a sustained period
   (2016: 3.8x)
- EBITDA margin below 40% for a sustained period


Satisfactory Liquidity: eHi has sufficient liquidity, with CNY787
million of cash and cash equivalents and CNY63 million in undrawn
loan facilities at end-2016. Fitch expects the company to
successfully roll over its domestic bank loans. However, eHi has
CNY2.3 billion in debt maturing in 2018, including the USD200
million bond and 60% of the USD150 million syndicated loan.
Liquidity risk will increase if the company fails to address its
refinancing needs by end-2017.

eHi signed a five-year framework agreement with China Development
Bank Corporation (A+/Stable) in 2015, which covers various
financing products for an aggregate amount CNY1.5 billion, of
which CNY218 million had been drawn at end-2016. Some of these
products are restricted for specific purposes, such as new vehicle
purchases, but may nonetheless provide an additional source of

EHI CAR: S&P Affirms 'BB' CCR, Rates New US$ Notes 'BB-'
S&P Global Ratings said it has affirmed its 'BB' long-term
corporate credit rating on eHi Car Services Ltd. The outlook is
stable. We also affirmed our 'BB-' long-term issue ratings on
eHi's outstanding U.S. dollar-denominated senior unsecured notes.
S&P said, "At the same time, we withdrew our 'cnBBB-' long-term
Greater China regional scale rating on eHi and our 'cnBB+' long-
term Greater China regional scale rating on the notes.

"Also, we assigned our 'BB-' long-term issue ratings on eHi's
proposed U.S. dollar-denominated senior unsecured notes. The issue
rating is subject to our review of the final issuance

"We are affirming the ratings because we expect eHi's cash flows
and profit margins to improve over the next 12-24 months. The
company's increasingly effective vehicle management will fuel the
improvement even as it meaningfully expands its franchise. We
anticipate eHi's EBIT margins to be 13%-18% over the next 12-24
months and EBIT interest coverage to be 1.3x-2.4x. The company's
EBIT margin was 15.3% in the first quarter of 2017 and 12.8% in
2016 and its EBIT interest coverage was 1.7x and 1.2x.

"In our view, eHi should be able to maintain adequate liquidity
and remain in compliance with its covenants. We expect eHi's
headroom in its maintenance covenants to reduce as the company
grows. However, we expect eHi will be able to remain in compliance
by replacing these facilities with other covenant-light facilities
as necessary, or by proactively slowing down fleet expansion. The
company's compliance with financial covenants will be a key credit
factor, especially if it does not effectively refinance or repay
its existing syndicated loan facility while continuing with its
growth plan.

"We expect eHi to maintain its fleet utilization rates and
pricing. The company's revenue per available car (RevPAC) for
rental services was stable at Chinese renminbi (RMB) 120-RMB130
over 2014-2016. RevPAC increased to RMB131 in the first quarter of
2017, supported by healthy utilization and stable average daily
rental rate, despite the company's aggressive growth strategy.
We attribute stable operating metrics to the company's ongoing
initiatives to upgrade its fleet and reduce the average age of its
fleet. This includes acquiring vehicles through fixed-rate
repurchase program with auto original equipment manufacturers
(OEMs) or car dealers in China. These programs generally allow eHi
the option to dispose of vehicles after one to two years of
operations back to OEM or dealers. We estimate that nearly half of
eHi's fleet is covered by such programs, allowing it to partially
alleviate asset risks or volatility."

A small scale relative to global peers', limited track record in
executing its growth plan, and geographical concentration in China
continue to constrain eHi's credit profile. The company's focus on
the short-term car rental market, which is highly fragmented, is
an added constraint. In addition, the company is likely to
continue to rely on external funding to support its growth in the
next two years. Mitigating factors include eHi's relatively good
position in China as the No. 2 player (by revenue) and improving
profit margins, and our favorable outlook for car rentals in

S&P said, "Our issue rating on the proposed notes is one notch
below the corporate credit rating on eHi to reflect the
subordination risk associated with the notes. The company's ratio
of priority claims is likely to exceed our 15% downward notching
threshold in the coming 12 months, given our expectation of rising
debt at the subsidiaries. eHi expects to use the notes proceeds
for refinancing existing debt, capital spending, and general
corporate purposes.

"The stable outlook reflects our expectation that eHi will
continue to gradually improve its profit margins and cash flow
adequacy over the coming 12-24 months. We expect the company's
EBIT margin to be 13%-18% and its EBIT interest coverage to be
1.3x-2.4x over the period, despite an aggressive growth plan.

"We may downgrade eHi if a material delay in planned vehicle
replacements, a decline in the
utilization rate, or stiffening price competition weakens the
company's profit margins and cash flows. A downgrade trigger could
be eHi failing to sustain its EBIT interest coverage at 1.3x or
above. We may also lower the ratings if eHi's covenant headroom
diminishes such as the company faces delays in repayment or
refinancing its credit facilities with other covenant-light

"Ratings upside is unlikely in the coming 12 months due to eHi's
limited track record in executing an aggressive expansion. We may
consider raising the rating if eHi can expand while keeping its
fleet up to date, and maintaining its utilization rates and
pricing, leading to higher profitability. An upgrade trigger could
be EBIT margins consistently staying at 18% or above. An upgrade
would hinge on eHi continuing to demonstrate prudent financial
management, with EBIT coverage at 1.7x or above."

JIANGSU NANTONG: Moody's Assigns B2 Corporate Family Rating
Moody's Investors Service has assigned a first-time B2 corporate
family rating to Jiangsu Nantong Sanjian Construction Group Co.,

The rating outlook is stable.


"JNTC's B2 rating reflects its established market position in
Eastern China, with a proven and stable operating track record
attributed to its strong execution of projects and diversified
client base," says Danny Chan, a Moody's Analyst.

As one of the largest privately owned construction companies in
China (A1 stable), with more than 20 years of experience, JNTC has
built a solid track record and established a good brand and
relationships with major developers and corporates over the years.

Moody's expects that JNTC's revenues will grow at mid-to-high
single-digit percentage rates in 2018 and 2019, underpinned by its
increasing engagement in infrastructure projects and order backlog
of 2.0x-2.5x of sales as of end-June 2017. JNTC's focus on
economically healthy regions has supported it strong growth over
the past decade.

Its EBITDA margin has been consistently above 7%-8% over the past
four years, despite its high exposure to building construction,
which is inherently cyclical and low margin in nature. Its stable
profitability is attributed to its strong execution capability,
labor management skills and diversified client base.

"Moody's expects that the company will maintain or slightly
improve its profitability over the next 1-2 years, because of the
increasing contribution from more profitable infrastructure
projects under its new public private partnership model," adds

JNTC's B2 rating is constrained by its concentrated focus on the
construction of residential buildings, which over the last five
years has generated about 80% of its revenues and 70%-75% of its
gross profit.

JNTC's investment in public private partnership (PPP) projects
will gradually increase and likely require additional debt
funding, because many of the infrastructure projects that the
company has invested in are located in lower-tier cities with weak
economic fundamentals and long payback periods.

Nevertheless, the cash proceeds that JNTC receives from the
project owner (the local government) upon completion of the PPP
projects will reduce the requirement for such debt funding.

Other factors that constrain the company's rating include its
small scale, high leverage and weak corporate governance.

JNTC's revenue of RMB20 billion in 2016 was low when compared with
other rated state-owned enterprise construction peers in China.
Its adjusted debt/EBITDA was high, at 5.5x during the same period,
because of its high working capital needs, extensive amount of
lending to external parties and outbound guarantees.

Moody's expects that JNTC will gradually reduce its amount of
intercompany lending and outbound guarantees and improve its
corporate governance, following its listing on China's National
Equities Exchange and Quotations in July 2016.

Moody's further expects that increasing working capital needs, as
well as the high level of intercompany lending and guarantees -
despite recent reductions - will remain material, such that
debt/EBITDA will remain elevated at 5.5x-6.0x over the next 1-2

The company's liquidity is adequate. Its cash balance of RMB3.9
billion at end-March 2017, together with the RMB1 billion in
proceeds from its domestic bond issuance in April 2017, will be
sufficient to cover its RMB4.7 billion in short-term debt.

Moody's expects that the investment size of its PPP projects will
stay at a moderate level of RMB500 million-RMB1 billion per year
over the next 1-2 years.

JNTC's B2 rating also reflects its parent's weak credit profile.
Its parent, Nantong Sanjian Holdings Co., Ltd. (unrated) - which
owns 73.05% of JNTC - demonstrates high debt leverage, primarily
due to its financing needs for real estate development.

The stable rating outlook reflects Moody's expectation that JNTC
will maintain its market share and EBITDA margins, gradually lower
its amount of outbound guarantees and intercompany lending, and
remain prudent in its financial management, while expanding its
PPP investments.

JNTC's rating could be upgraded if the company: (1) successfully
expands its operations to infrastructure projects, while
minimizing execution risks; (2) improves its profitability and
debt leverage through the adoption of prudent investment
strategies; and (3) improves its corporate governance by reducing
external guarantees.

Credit metrics indicative of upward rating pressure include
adjusted debt/EBITDA below 5.0x on a sustained basis.

On the other hand, JNTC's rating will be downgraded if: (1) it
aggressively invests in PPP projects, resulting in a considerable
deterioration in its financial profile; (2) it experiences a
substantial decline in new contracts wins; (3) it incurs large
cost overruns and delays in its projects; and (4) there is
evidence of increasing outbound guarantees or intercompany

Credit metrics indicative of downward rating pressure include
adjusted debt/EBITDA in excess of 6.5x on a sustained basis.

The principal methodology used in this rating was Construction
Industry published in March 2017.

Jiangsu Nantong Sanjian Construction Group Co., Ltd. (JNTC),
headquartered in Haimen, Jiangsu Province, is a privately owned
engineering contractor in eastern China. Its revenues totaled
RMB20 billion in 2016.

The company is 73.05% owned by Nantong Sanjian Holdings Co., Ltd.
(unrated), which is in turn majority owned by its founders and
13.2% owned by Haimen Urban Development Investment Co., Limited
(unrated), under the Haimen government.

JNTC listed on China's National Equities Exchange and Quotations
on July 25, 2016.

JIANGSU NANTONG: S&P Assigns 'B-' CCR; Outlook Stable
S&P Global Ratings assigned its 'B-' long-term corporate credit
rating to Jiangsu Nantong Sanjian Construction Group Co. Ltd.
(JNSC). The outlook is stable. JNSC is a China-based engineering
and construction (E&C) company.

S&P said, "The rating on JNSC reflects our view that the company
will remain disadvantaged by a small market position in a highly
competitive operating environment. In addition, the company's debt
leverage will remain very high due to its growth strategy of
providing financing to customers as a means of competing for new
clients. As a regional E&C company competing against larger and
better-known peers, this approach may be necessary. As such, we
are not expecting the company's expensive customer-acquisition
strategy to materially change.

"We believe JNSC will face material liquidity deficits over the
coming 12 months due to a high level of short-term debt. The
company borrows short term in order to lower its interest costs.
The consequential refinancing risk is partly offset by JNSC's
stable relationships with local banks and fair standing in the
credit markets, as reflected in its recent onshore bond issuance,
IPO, and share placements. However, the company is vulnerable to
any adverse changes in China's domestic liquidity conditions.

"We believe that debt leverage will remain at a very high level
because of JNSC's aggressive engagement in project financing to
customers--mainly highly leveraged property developers that have a
relatively weak capability to obtain bank financing. We expect
JNSC will continue to prioritize revenue growth over reducing debt
leverage. We estimate the amount of customer financing will
increase to about Chinese renminbi (RMB) 2.5 billion-RMB3 billion
in the coming 12 months, from RMB2 billion in 2016. Partially
offsetting this, we anticipate the company will reduce its off-
balance sheet exposure to third parties to below RMB2 billion from
RMB2.2 billion in 2016 due to the imminent expiry of guarantees to
local state-owned enterprises (SOEs).

"We anticipate that the free operating cash flow (FOCF) will turn
positive and reach RMB100 million-RMB200 million in the coming 12
months, from net outflows of RMB200 million in 2016. This is due
to better working capital management through a slowdown in the
additional amount spent on project financing to customers, and a
slight lengthening of JNSC's payable days. We believe the good
order backlog from its conventional engineering, procurement, and
construction (EPC) of projects can still provide a fair level of
positive operating cash flow.

JNSC's EBITDA margin will likely be fairly stable at 7%-7.5% in
the coming 12 months, from about 7% in 2016. Although JNSC faces
pricing and margin pressure in its core EPC projects, by offering
project financing to customers, the company is able to charge a
higher price to offset such downward pressure. Additionally, as a
private enterprise, JNSC is able to be more flexible with its
selling, general, and administrative (SG&A) expenses and work
force. S&P said, "We expect that SG&A expenses as a percentage of
revenues will likely stay at 3.3%-3.6%, which is better than
stated-owned E&C players'.

"In our view, JNSC has an average standing in E&C markets, with a
primary focus on labor-intensive work. We estimate the property
market will be a key driver of growth, accounting for 80% of
revenues in the coming 24 months. We believe any adverse change or
industry downturn in the property market will affect both earnings
and the quality of outstanding receivables of JNSC.

"We assess JNSC as a core subsidiary of Nantong Sanjian Holdings
Co. Ltd. We see a material integration and management overlap.
JNSC is the critical operating arm that carries out the core E&C
services on behalf of the group. We expect JNSC will continue to
account for more than 95% of the group's earnings and 80% of the
assets in the coming 12-24 months. Therefore, we equalize the
corporate credit rating on JNSC to the credit profile of Sanjian
Holdings. Currently, Sanjian Holdings is developing land that was
acquired through debt-funding, and at this stage there is limited
earnings contribution. As a result, we estimate Sanjian Holdings'
debt-to-EBITDA ratio will range from 7x-9x over the coming two
years, which is higher than JNSC's leverage.

"The stable outlook on JNSC reflects our expectation the company
will be able to generate positive FOCF in the coming 12 months,
from the currently negative FOCF; this is supported by the
company's backlog of stable conventional E&C projects. Debt
leverage of the company and its parent, however, will remain at a
very high level due to aggressive off-balance sheet guarantees and
the business model of offering project financing to customers. We
also expect the company to continue to face liquidity pressure due
to its strategy of utilizing short-maturity loans to lower
interest costs. JNSC's standing in China's fairly stable credit
markets and its relationship with local banks partly offset the
refinancing and liquidity risks.

"We could lower the rating if the operating cash flow of JNSC
remains negative such that its debt leverage positon further
deteriorates and the capital structure become unsustainable. This
could happen if: (1) the company engages in more aggressive
customer financing than expected; (2) the accounts receivable days
of its conventional E&C business are extended due to weakening
bargaining power or industry downturns; or (3) the company engages
in debt-funded acquisitions or expansion.

"We may lower the ratings by one or more notches if there is any
material risk or delay to JNSC and Sanjian Holdings' refinancing
plans and liquidity profile. This could happen if: (1) JNSC's
banking relationships weaken, for example through a reduction in
the amount of bank facilities or the number of relationships with
banks; or (2) the interest rate on the existing bank borrowings
increases substantially which potentially indicates a weaker
standing in the credit market.

"We see limited upside potential in the coming 12 months. We could
upgrade the company if JNSC and Sanjian Holdings can: (1) improve
their debt-to-EBITDA ratio to below 5x for a sustained period of
time and at the same time lengthen their debt maturity profile to
materially more than two years; or (2) strengthen their liquidity
position such that the sources of liquidity exceed uses by more
than 1.2x on a 12-month horizon."

POWERLONG REAL: Tap Bond Issue No Impact on Moody's B1 CFR
Moody's Investors Service says that Powerlong Real Estate Holdings
Limited's B1 corporate family rating and B2 senior unsecured
rating and the stable outlook on the ratings are unaffected by the
company's announcement of a tap bond offering on terms and
conditions that are the same as its existing USD200 million senior
notes due 2020.

Powerlong plans to use the proceeds from the tap offering mainly
to refinance existing debt.

"Powerlong's debt maturity will improve upon successful issuance,
and the issuance will not otherwise materially impact the credit
metrics that support its ratings," says Anthony Lee, a Moody's
Analyst, who is also the Lead Analyst for Powerlong.

Moody's expects that Powerlong's adjusted EBIT/interest will
improve to around 3.0x over the next 12-18 months from 2.8x in
2016 and that its adjusted debt/adjusted capitalization will stay
at 55% over the same period, compared with 54% in 2016.

Moody's also expects that Powerlong's rental income will register
another 25% - 30% in growth to RMB750 -- RMB800 million over the
next 12-18 months, as it will open five retail malls to reach a
total of 36 malls by end-2017.

As a result, Powerlong's adjusted rental income/interest coverage
will improve to 0.4x-0.5x over the next 12-18 months from 0.3x in

The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in April 2015.

Powerlong Real Estate Holdings Limited is a Chinese developer
focused on building large-scale integrated residential and
commercial properties in China.

At end-2016, its land bank totaled around 10.7 million sqm in GFA
under development and for future development, as well as 2.5
million sqm of malls in operation.

The company listed on the Hong Kong Exchange in October 2009. The
founding Hoi family held an aggregate 65.46% stake in Powerlong at


ADORN SPECIALITY: Ind-Ra Gives 'BB' Issuer Rating; Outlook Stable
India Ratings and Research (Ind-Ra) has assigned Adorn Speciality
Polymers Private Limited (ASPPL) a Long-Term Issuer Rating of 'IND
BB'. The Outlook is Stable. The instrument-wise rating action is:

-- INR180 mil. Fund-based limits assigned IND A4+ rating.


The ratings reflect ASPPL's moderate credit profile. According to
provisional financials for FY17, revenue was INR940 million (FY16:
INR1,134 million). The decline in revenue was due to a fall in
export sales. Operating EBITDA margin improved to 3.7% in FY17
from 2.2% in FY16, driven by a fall in overhead expenses.
Meanwhile, in FY17, interest coverage (operating EBITDA/gross
interest expense) was 1.6x (FY16: 1.1x) and net leverage (net
debt/operating EBITDA) was 5.5x (7.4x). The improvement in credit
metrics was due to an improvement in EBITDA to INR34 million in
FY17 from INR25 million in FY16.

The ratings, however, are supported by ASPPL's comfortable
liquidity position, indicated by utilisation of its working
capital limits within the sanctioned limits during the 12 months
ended June 2017, and the directors' experience of around three
decades in dye trading.


Negative: Deterioration in credit metrics due to a decline in
EBITDA will be negative for the ratings.

Positive: A substantial improvement in the scale of operations and
credit metrics will be positive for the ratings.


Incorporated in 2003, ASPPL is engaged in the manufacturing,
trading and exporting of leather dyes. It is managed by Mr Vibhor
Agarwal and Ms Sanchi Agarwal.

DELHI INTERNATIONAL: S&P Affirms 'BB' CCR, Outlook Stable
S&P Global Ratings said it affirmed its 'BB' long-term corporate
credit rating on Delhi International Airport Ltd. (DIAL). The
outlook is stable. S&P said, "We also affirmed the 'BB' long-term
issue rating on the company's senior secured notes.

"We affirmed the ratings on DIAL because we believe that the
company's high cash reserves and good operating performance will
provide a sufficient buffer to absorb lower tariffs. Delay in
implementation of lower tariffs has further allowed the company to
bolster its cash reserves.
We expect DIAL's strong operating performance to be supported by
good passenger growth and no negative regulatory surprises.
However, we believe that DIAL's financial position will weaken
from strong levels (following the lower tariffs), in line with our

"We forecast that the company's ratio of funds from operations
(FFO) to debt will still remain above 8% in fiscal 2019 (ending
March 31, 2019) because the company has been prudently conserving
cash amid uncertainty over its tariff cut. We also expect the
company to largely meet its funding requirements over fiscal 2018-
2019 from its existing cash balance. This is even after assuming
the additional capital spending for the next phase of development
of around Indian rupee (INR) 50 to INR60 billion over the next
four to five years.

"We estimate EBITDA will fall by around 60% in fiscal 2018 and 40%
in 2019. As a result, we estimate the ratio of FFO to debt at
about 20% in fiscal 2018 compared with 43.5% in fiscal 2017. The
sharp drop in tariff reflects the over-collection of the "control
period one" (April 2009 to March 2014) tariff due to the delay in
implementing the "control period two" (April 2014 to March 2019)
tariff. Following an Indian Supreme Court ruling on July 3, 2017,
DIAL has now implemented the control period two tariff. As a
result, User Development Fees have been removed for all arriving
passengers, and there will be around a 90% cut for domestic and
international departing passengers. Additionally, landing and
parking charges, which are levied on airlines, will fall by around

"In our opinion, the large magnitude of the recent tariff changes
due to the delay in implementing the second tariff order reflects
the relatively less-established and weaker regulatory framework in
India. We assess the regulatory risk for airports in India to be
higher than that for other rated airports elsewhere in Asia-
Pacific. This reflects the still-evolving nature of regulations,
as shown from the disputes and delay in passing regulatory orders
by the Airports Economic Regulatory Authority.

"However, the tariff mechanism provides assured returns on
regulated asset bases including a "true up" mechanism for traffic
volume. This supports the regulatory framework. We believe greater
clarity will come from the implementation of the revised tariff
and resolution of disputed items (which the Supreme Court of India
has directed to be resolved within the next two months).

"We anticipate the company's strong market position and good
operating performance will help mitigate the elevated regulatory
risk. As DIAL is the sole airport provider to the National Capital
Region, the main political center and one of the largest economies
in India, we expect the company to remain the largest airport in
India by passenger and cargo volumes. We also expect DIAL to
maintain its good operating efficiency despite EBITDA margins
being depressed as a result of its 46% revenue sharing with the
Airport Authority of India (AAI).

"We continue to believe that AAI's strategic shareholding and
right to approve DIAL's key decisions and related-party
transactions insulates DIAL from the weak credit profile of its
majority shareholder GMR Infrastructure Ltd. The stable outlook
reflects our view that DIAL will operate under stable tariff
levels and maintain its strong market position and operating
efficiency. We expect the company to continue to manage its
capital spending plans and balance sheet, such that the ratio of
FFO to debt remains more than 8% in the next 12-24 months.

"We could lower the rating if we expect DIAL's ratio of FFO to
debt to be less than 8% for a prolonged period because: (1) capex
is significantly higher than we previously anticipated without a
corresponding increase in tariffs; and (2) the company faces
significant delays in completing its commercial property
developments or its rental income is significantly lower than we

"We could also downgrade DIAL if operating uncertainty and
volatility exceeds our existing expectations due to negative
regulatory developments. In addition, downgrade pressure could
also arise if GMR Infrastructure has a materially negative
influence on DIAL's strategy or cash flows. Significantly large
dividend payouts would indicate such pressures.

"We may raise the rating if we expect DIAL's FFO cash interest
coverage to be more than 2x on a consistent basis. We believe this
would depend on future tariff revisions that are timely and
reflect additions to the regulated asset base. An upgrade would
also assume stabilization of the company's regulatory environment
with improved timeliness of tariff adjustments and resolution of
regulatory disputes."

EASTERN TRAVELS: Ind-Ra Gives 'BB' Issuer Rating; Outlook Stable
India Ratings and Research (Ind-Ra) has assigned Eastern Travels
Private Limited (ETPL) a Long-Term Issuer Rating of 'IND BB'. The
Outlook is Stable. The instrument-wise ratings actions are:

-- INR90 mil. Fund-based limits assigned with IND BB/Stable
    rating; and
-- INR30 mil. Proposed fund-based limits* assigned with
    Provisional IND BB/Stable rating.

* The above rating is provisional and shall be confirmed upon the
sanction and execution of the loan documents for the above
facilities by ETPL to the satisfaction of Ind-Ra.


The ratings reflect ETPL's moderate credit profile due to its
presence in a highly fragmented and intensely competitive tourism
industry. According to provisional financials for FY17, gross
revenue was INR977 million (FY16: INR932 million), gross interest
coverage (EBITDA/gross interest) was 1.6x (1.4x), net financial
leverage (net debt/EBITDA) was 5.6x (5.1x) and operating EBITDA
margin was 1.9% (1.6%). The increase in revenue was driven by
growth in the overall ticket booking business. The improvement in
operating EBITDA margin was due to favourable foreign exchange

Moreover, net financial leverage deteriorated due to an increase
in debt. On the other hand, interest coverage improved on account
of a fall in interest cost due to an improvement in the collection
period and efficient utilisation of the cash credit facility.

The ratings also reflect ETPL's tight liquidity due to the working
capital-intensive nature of business. Its average working capital
limit utilisation was over 100% for the 12 months ended June 2017.
Its net working capital cycle was elongated at 44 days in FY17
(FY16: 37 days).

The ratings, however, are supported by ETPL's operational track
record of over five decades and strong clientele. Its clients
include Tata Steel Limited ('IND AA'/RWE), Coal India Limited, the
Indian Institutes of Management, the National Institutes of
Technology, Uranium Corporation of India Limited, Xavier Institute
of Social Service and Vodafone Mobile Services Limited ('IND


Negative: Any deterioration in the credit metrics will be negative
for the ratings.

Positive: An improvement in revenue and credit metrics could lead
to positive rating action.


Formed in 1980, ETPL provides hospitality and tourism services to
corporate clients. It offers ticket booking and foreign exchange
(through issuing travellers cheque or card and cash exchange)

GREENKO ENERGY: Fitch Affirms B+ Long-Term IDR; Outlook Stable
Fitch Ratings has affirmed Greenko Energy Holdings' Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B+'. The Outlook
is Stable. The agency has also affirmed the ratings of Greenko
Investment Company's (GIL) USD500 million 4.875% senior notes due
2023 at 'B+' with a Recovery Rating of 'RR4'. The notes benefit
from a guarantee by Greenko; the ultimate holding company of the
group's assets, including those contained in the restricted group
of companies that back the notes of GIL and those of Greenko Dutch
B.V (GBV). Both GIL and GBV are subsidiaries of Greenko.

Simultaneously, Fitch has affirmed GBV's USD550 million 8% senior
notes due 2019 at 'B+' with a Recovery Rating of 'RR4'. However,
Fitch note that Greenko has initiated redemption of these notes,
with completion expected by August 23, 2017. Greenko has raised an
additional USD1 billion (BB-) notes under GBV, with part of the
proceeds to be used to refinance the USD550 million notes and the
balance to be deployed to drop down more assets to create a new
restricted group with total capacity of over 1.0GW.


Elevated Credit-Risk Profile: Greenko's credit-risk profile is
elevated by construction risks and the structural subordination of
operational-asset cash flow to prior-ranking debt at the two
restricted groups. Greenko's overall credit risk profile is placed
at 'B+', supported by some operational assets that are retained
under Greenko, dividends from the restricted groups (subject to
compliance with covenants) and demonstrated financial support from
strong shareholders.

Greenko has about 1.94GW of operational wind, hydro, solar and
thermal generation capacity, with more than 800MW under
construction. Operational assets increased by 2.7x over the
previous two years due to Greenko's acquisition of SunEdison,
Inc.'s India portfolio in September 2016, which marked Greenko's
entry into India's solar market. Of these operating assets, 403MW
are placed under the GIL-restricted group and 623MW (to increase
to 1,075MW with USD1 billion issuance) under the GBV-restricted

Guarantee Supports GIL's Note Rating: The rating assigned to GIL's
notes reflect the guarantee from Greenko, as GIL's credit profile
is weaker than that appropriate for a 'B+' rating due to its short
operating history and weak financial metrics in the medium term.

Key drivers of GIL's credit profile include:
Structurally Enhanced Notes: The structural features created
through the notes indenture provide additional protection via
restrictions and limitations on use of cash and investments at the
restricted group level. The restricted group is not permitted to
incur additional debt or make restricted payments if they raise
the restricted group's ratio of gross debt/EBITDA to above 5.5x.
The restricted group does not have significant prior-ranking debt,
aside from a working-capital debt facility limited at USD30
million, which is secured exclusively against accounts
receivables. Total external debt is also limited to 15% of total

Furthermore, note holders benefit from access to cash generation
and the restricted group's assets through the rupee-denominated
notes, via which the proceeds of the US-dollar notes are on-lent
to the asset owners of the restricted group. The rupee-denominated
notes have a first charge on all assets, except the accounts
receivables of the restricted group.

Unseasoned Portfolio, Diversified Operations: The limited maturity
of the restricted group's assets is a credit weakness. Project
capacity weighted-average life is only one and a half years. Two
hydro assets - 10MW Perla Hydro and 96MW Sneha Kinetic - were
expected to commence operation in July 2016, but only came online
in December 2016 and March 2017, respectively. Nevertheless, the
assets are diversified by type and location, mitigating risks from
adverse wind patterns or monsoon conditions. Wind assets are
spread across three Indian states. The group also has two glacier-
fed and one monsoon-fed hydro-power plants.

Price Certainty, Volume Risks: Long-term power-purchase agreements
(PPAs) for the restricted group's wind and hydro assets, with
tenors of 25-35 years for contracts with state utilities and 10-13
years for direct sales, support the restricted group's credit
profile. Production volume will vary with wind and hydro patterns,
despite asset diversification, although the long-term PPAs provide
price-risk protection.

Weak Counterparty Profile: The weak financial position of GIL's
customers constrains its credit profile. State-owned utilities
located in the states of Rajasthan and Andhra Pradesh have weaker
financial profiles than in Uttarakhand. However, GIL has diverse
customers, which include private companies across IT business
parks in the state of Karnataka that off-take about 36% of total
capacity. No single customer accounts for more than 30% of total
capacity, mitigating counterparty risk. GIL can terminate PPAs if
payments are delayed. This may provide customer-switching ability,
but GIL remains exposed to revenue loss and working capital
pressure while negotiating new agreements.

Improving Financial Profile: Fitch expects the financial
performance of the GIL restricted group to improve, with two
assets chalking up a full-year of operation in the financial year
ending March 2018 (FY18). The agency expects the restricted
group's financial leverage, as measured by net-adjusted
debt/operating EBITDAR, to improve to about 4.0x by end-FY20, from
9.9x at end-FY17 and for EBITDA net-interest coverage to improve
to 2.1x from 1.0x.

Low Forex and Refinancing Risks: The restricted group's earnings
are in Indian rupees, but the notes are denominated in US dollars,
giving rise to foreign-exchange risk. However, GIL hedges the
entire principal and semi-annual coupon payments of its US-dollar
notes. Fitch believes GIL's association with GIC, Singapore's
sovereign-wealth fund, and the Abu Dhabi Investment Authority,
curtails refinancing risks by improving Greenko's access to
funding in banking and capital markets.


Fitch believes a one-notch differential between the ratings of
Greenko and GBV's USD1 billion notes is justified due to
construction risks and the structural subordination of Greenko's
operational-asset cash flow to prior-ranking debt at the two
restricted groups.

Neerg Energy Ltd (senior note rating: B+), ReNew Group's
restricted group, leads GIL in terms of asset operating history.
Neerg also benefits from partial exposure to solar; a more stable
source of power generation. Direct customer off-take amounts to
about 36% of GIL's capacity versus 20% of Neerg's, but Neerg gains
from state utilities with better credit profile as its off-takers.
Fitch believes Neerg's features more than offset GIL's better
financial profile, resulting in GIL's credit profile being weaker
than that suitable for a 'B+' rating.


Key assumptions within the rating case for Greenko include:
- For unrestricted projects:
- Operations to commence as per schedule
- Average plant-load factors of 28%
- Plant tariffs in accordance with PPAs
- Average EBITDA margins of 86% over the next four years
- Average receivable period of 45 days, in line with management
- Dividend income from the two restricted groups subject to
   covenants of respective notes

Key assumptions within the rating case for GIL include:
- Average plant-load factors of about 28% for wind assets and in
   line with historical performance for hydro assets
- Plant tariffs in accordance with PPAs
- EBITDA margins to decline to 87% by FY20 from 92% in FY17
- Average receivable period of 80 days for the next two of years
   then 70 days thereafter
- Cash accruals to be used for dividend pay-outs based on note
   covenants or be retained within the restricted group to help
   address liquidity issues and refinancing risk
- Recovery Ratings are based on the liquidation value of
   Greenko's total assets. Fitch has assigned the group a
   liquidation value of about USD1.3 billion under a distressed
   scenario, reflecting a 75% advance rate on receivables-due to
   the lack of counterparty (state utilities) default history -
   and 50% advance rate for fixed assets based on the long
   project life. Fitch then reduces the liquidation value by 10%
   to account for bankruptcy-related administrative claims.

In its recovery analysis, Fitch has assumed a fully drawn working
capital facility of USD80 million for GIL and GBV, the amount
allowed under the US dollar notes' covenants, as working capital
debt is tapped when companies are under distress. Proceeds from
receivables are first applied to satisfy obligations under the
working capital facility, with only the excess available to US
dollar note holders. The fixed assets will be applied to the US
dollar notes. The waterfall results in nearly 100% recovery for
the US dollar note holders.

However, Fitch rated the senior unsecured bonds 'B+/RR4' because,
under Fitch Country-Specific Treatment of Recovery Ratings
criteria, India falls into Group D of creditor friendliness, and
the instrument ratings of issuers with assets in this group are
subject to a soft cap at the issuer's IDR.


For Greenko:
Developments that may, individually or collectively, lead to
positive rating action include:
- EBITDAR net fixed-charge coverage of 2.5x or more on a
   sustained basis. This includes the cost of forex hedging
- Improvement in leverage, as measured by net-adjusted
   debt/operating EBITDAR, to below 3.5x on a sustained basis

Developments that may, individually or collectively, lead to
negative rating action include:
- Any shareholder changes that adversely affect the company's
   risk profile, including its liquidity and refinancing, risk
   management policies or growth risk appetite
- Weakening in asset operational or financial performance or
   aggressive investments that are not sufficiently supported by
   equity, which leads to EBITDAR net fixed-charge coverage not
   meeting Fitch's expectations of around 2x on a sustained basis
   over the medium term

LODHA DEVELOPERS: Fitch Puts 'B' IDR on Rating Watch Negative
Fitch Ratings has placed Lodha Developers Private Limited's
(Lodha) 'B' Long-Term Issuer Default Rating (IDR) and the 'B'
long-term rating on its outstanding USD200 million 12% unsecured
unsubordinated notes due 2020 on Rating Watch Negative (RWN),
following the company's announcement that it is seeking the
consent of the holders of its US dollar notes to amend certain
covenants in indenture and to waive a breach of covenants.

The RWN will be resolved following a review of the outcome of the
consent solicitation. The US dollar notes are issued by Lodha's
wholly owned subsidiary, Lodha Developers International Limited,
and guaranteed by Lodha and certain subsidiaries.

Lodha is seeking the consent from bondholders of its USD200
million unsecured unsubordinated bonds to waive the breach of the
restricted payments covenant. As of June 30, 2017, Lodha and
certain restricted subsidiaries advanced loans and provided
shortfall guarantees to its 40%-owned joint-venture in London -
which is not part of the original restricted group, in excess of
the consolidated net income basket limit allowed under the bond
indenture. Concurrent with the consent solicitation process, Lodha
is seeking consent to reorganize, such that the London properties
become part of the restricted group as Lodha increases its stake
in the London properties to at least 75%.]


Risks from Covenant Breach: Fitch notes that the company has until
Aug. 9, 2017 to obtain bondholder consent. In the event that this
is unsuccessful, the US dollar bonds may need to be redeemed
should the bondholders holding at least 25% of the face value of
outstanding bonds exercise the right of acceleration and the
company is not able to rectify or refinance the bonds within 30

No Impact on IDR from London Amalgamation: On a pro forma basis as
of March 31, 2017, Fitch estimates that Lodha's consolidated
leverage (defined as net adjusted debt/adjusted inventory) would
drop to 72% if the London business were amalgamated, from 80%
previously. At March 31, 2017, the London business had external
debt of INR26.4 billion and adjusted inventory of INR60.7 billion,
which amounts to a leverage ratio (defined as net debt/adjusted
inventory) of 43%. Fitch leverage ratios exclude London business'
outstanding loans payable to Lodha. As such, there would be no
immediate rating impact on the IDR should Lodha receive the
necessary consents.

Strong Sales, Cash Collections: Lodha continued to report robust
property presales and cash collections in India in the quarter
ended June 30, 2017 (Q1FY18, fiscal year ends March 31), compared
with Fitch full-year FY18 presales expectation of around INR70
billion (FY17: INR69.2 billion) and cash collection expectation of
INR77 billion. The company's collections are speeding up due to a
number of its large projects coming to a close this year. Strong
sales in FY17 were also supported by the company's Palava project,
which benefits from the Indian government's push on affordable
housing including the announcement of its infrastructure status,
and tax and interest-cost incentives to buyers. Fitch expects
Lodha to sell around INR30 billion of properties in London
annually, between FY18 and FY20.

London Project Risks Evolving: By September 2017, Lodha needs to
convert the short-term project debt of around GBP225 million
(INR20 billion) at its prime residential Mayfair development in
London, and secure construction financing to fund an estimated
balance cost of around GBP197 million. The development was
formally launched in May 2017 and GBP80 million has been sold as
of June. Demand for Mayfair prime property has been less affected
than other prime areas in Central London since the Brexit vote
last year, and this may support Lodha's ability to secure the
construction financing. The company indicates that it is in
discussions with lenders and expects to close out the project
financing in about a month.

Lodha was able to secure 30-month construction financing of GBP290
million for its smaller residential project in London earlier this
year, with a bullet repayment of principal. Lodha launched sales
of this project, which is the smaller of the two, in April 2016,
and had sold around GBP120 million by June 2017.


Lodha's 'B'/RWN rating compares well against peers Indiabulls Real
Estate Limited (IBREL, B+/Stable) and Xinyuan Real Estate Co.,
Ltd. (B/Stable). Lodha has a stronger business profile compared
with IBREL with nearly twice the operating scale, and a better
track record of sales and execution over the last three to four
years. However, Lodha's leverage is considerably higher than
IBREL's, which drives its lower rating. Xinyuan is a small
regional developer in China that has weaker business risk compared
with Lodha. A key weakness for Xinyuan is its need to constantly
replenish its land bank amid rising land costs. However, Xinyuan's
substantially lower leverage compared with Lodha balances out
these risks.


Fitch's key assumptions within Fitch ratings case for the issuer
- India presales of around INR70 billion and INR90 billion in
   FY18 and FY19, respectively
- India cash collections of around INR75 billion-80 billion
   annually in FY18-FY19
- India construction cost of around INR50 billion in FY18
- London properties annual presales of around INR30 billion
   between FY18 and FY20
- London properties cash collections of around INR17 billion in
   FY19 and INR60 billion in FY20
- London properties construction cost and other expenses of
   around INR12 billion annually in FY18-FY19


Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- If the company is able to obtain the bondholders' consent to
   waive the covenant breach and proposed reorganisation, Fitch
   may affirm Lodha's ratings at 'B' and assign a Negative
   Outlook. The Negative Outlook reflects the refinancing risk
   including securing financing for its London project.

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- If the bondholders do not provide their consent to
   solicitation, and 25% or more of the bondholders by face value
   exercise the right of acceleration and the company is not able
   to rectify or refinance the bonds within 30 days, then Fitch
   may downgrade Lodha's ratings by more than one notch
- If the company is not able to obtain bondholder consent, but
   is able to cure the covenant breach by refinancing the bonds,
   Fitch will need to review the terms and conditions of such a
   refinancing, together with the company's progress towards
   meeting its refinancing needs, which may result in further
   negative rating action


Refinancing Risk: As of June 30, 2017, Lodha had more than INR28
billion of approved but undrawn credit facilities, compared with
around INR37 billion of contractual debt maturities in FY18. Lodha
indicated that it has already secured refinancing for around INR7
billion of these maturities, and it is currently in discussions
with lenders to refinance around half of the balance of INR30
billion. Lodha says it has a further 3,000 acres of unencumbered
land in its Palava project, valued at around INR150 billion (over
USD2 billion) based on land value, as well as an estimated INR40
billion of completed inventory by end-FY18, which the company can
pledge to non-bank financial institutions in order to secure
contingent liquidity, if required.

Fitch expects Lodha to continue to generate negative free cash
flow in FY18, for which Fitch believes the company will be able to
secure financing given its business risk profile as one of India's
leading homebuilders.

SARVOTTAM ROLLING: Ind-Ra Gives BB Issuer Rating; Outlook Stable
India Ratings and Research (Ind-Ra) has assigned Sarvottam Rolling
Mills Private Limited (SRMPL) a Long-Term Issuer Rating of 'IND B-
'. The Outlook is Stable. The instrument-wise rating actions are:

-- INR120 mil. Fund-based limit assigned IND B-/Stable/IND A4
    rating; and
-- INR55 mil. Non-fund-based limit assigned with IND A4 rating.


The ratings reflect SRMPL's moderate scale of operations and weak
credit metrics due to its presence in a highly fragmented and
intensely competitive steel industry, susceptibility to the
cyclicality of steel industry and raw material price volatility.

According to the FY17 provisional financials, the revenue was
INR1,150 million (FY16: INR1,082 million), operating EBITDA
margins were 1.77% (negative 4.56%), gross interest coverage
(operating EBITDA/gross interest expense) was 0.88x (negative
2.13x) and net financial leverage (adjusted net debt/operating
EBITDA) was 6.97x (negative 3.37x). The improvement in the
revenues and EBITDA margins is attributable to the increase in the
quantities of products sold in FY17 (FY17: 68,094MT, FY16:
36,850MT) and increase in the prices of steel products,

The ratings further reflects SRMPL's tight liquidity position as
its utilisation of the working capital facilities was about 95.39%
over the 12 months ended May 2017, with few instance of
overutilisation as well.

The ratings are supported by the two-decade-long experience of
SRMPL's promoters in the steel industry and the company's strong
relationships with its customers and suppliers.


Positive: Significant growth in the revenue and EBITDA margin,
leading to an improvement in the overall credit profile on a
sustained basis will be positive for the ratings.

Negative: Substantial deterioration in the liquidity profile will
be negative for the ratings.


Incorporated in 2007 located in Muzaffarnagar (Uttar Pradesh),
SRMPL manufactures ingots and thermo-mechanically treated bars.
The company is owned and managed by Mr. Sanjay Jain and Mr. Rajeev

The company has an installed capacity of 30,000 metric tonnes per
annum of steel ingots and 60,000 metric tonnes per annum of TMT

SPACEAGE SWITCHGEARS: Ind-Ra Affirms BB- Long-Term Issuer Rating
India Ratings and Research (Ind-Ra) has affirmed Spaceage
Switchgears Limited's (SSL) Long-Term Issuer Rating at 'IND BB-'.
The Outlook is Stable. The instrument-wise rating actions are:

-- INR60 mil. Fund-based working capital limits affirmed with
    IND BB-/Stable/IND A4+ rating; and
-- INR80 mil. Non-fund-based working capital limits affirmed
    with IND A4+ rating.


The ratings reflect SSL's small scale of operations owing to its
presence in an intensely competitive switchgear and electric
light-fitting industry. According to provisional financials for
FY17, revenue was INR192.00 million (FY16: INR142.88 million),
primarily driven by new orders and higher exports. Over FY14-FY16,
revenue declined due to a delay in receipt of payments for
government contracts. In FY17, EBITDA margin was 10.16% (7.87%).

The ratings also reflect a low order book position of INR100
million (about 0.52x of FY17 revenue) as at end-1QFY18 that is
likely to be executed by FY18, providing low short-term revenue

The ratings, however, are supported by strong credit metrics. In
FY17, interest coverage (operating EBITDA/gross interest expense)
was 97.50x (3.80x) and net leverage (total adjusted debt/operating
EBITDAR) was 1.87x (3.52x). The improvement in credit metrics was
due to the non-utilisation of fund-based and non-fund-based

The ratings are also supported by SSL's comfortable liquidity
position, indicated by an average utilisation of about 5% for the
12 months ended July 2017, and over 19 years of operating history.
Moreover, the promoters have over 10 years of experience in the
switchgear and electric light-fitting industry.


Negative: A decline in EBITDA margin leading to deterioration in
credit metrics will be negative for the ratings.

Positive: Scale of operations significantly improving and EBITDA
margin staying at the existing level will be positive for the


Incorporated in March 1998, SSL is engaged in the manufacturing,
trading and contracting of high mast lighting projects in India
and abroad. In addition, it manufactures LT panels, air circuit
breakers, moulded case circuit breakers, fuse bases, LT switchgear
panels, HT and LT bus ducts and bus trunkings, generator auxiliary
compartments, industrial lighting systems and others.

VEDANTA RESOURCES: Moody's Rates Proposed Senior Unsec. Notes B3
Moody's Investors Service has assigned a B3 rating to the proposed
senior unsecured notes to be issued by Vedanta Resources plc (B1
stable). Proceeds from the issuance will be used towards retiring,
in part, the company's existing term loans and a tender on its
senior unsecured notes maturing in 2019 and 2021.

The proposed notes are rated at the same level as the company's
existing senior unsecured notes, and are two notches below
Vedanta's B1 corporate family rating (CFR).

The rating outlook is stable.


Vedanta's B1 CFR continues to reflect the company's large scale,
diversified operations with a broad product portfolio spanning oil
and gas, base metals and energy assets, and its cost competitive
and integrated operations. The rating incorporates the group's
complex group structure, high leverage and the inherent volatility
in commodity prices that results in fluctuations in earnings and
cash flow generation.

Furthermore, the company's commitment to reducing debt levels,
simplify its corporate structure and its good track record in
implementing capacity expansions are key credit considerations.

"The company's $1.0 billion 6.375% senior unsecured notes issuance
in January 2017 and the announcement on 27 July of a liability
management exercise encompassing the proposed bond and bank
financing constitute proactive steps towards refinancing its debt
maturities and lengthening the age profile of its debt, and are
credit positives," says Kaustubh Chaubal, a Moody's Vice President
and Senior Analyst.

Pro-forma for the proposed bond and the bank financing, Moody's
expects Vedanta's refinancing risk at the holding company to abate
until January 2019.

Concurrent with the proposed notes issuance, Vedanta has also
announced a conditional tender offer for its $774.8 million 6%
2019 notes, and $900 million 8.25% 2021 notes.

The rating incorporates Moody's expectation that Vedanta will
continue to take proactive steps in executing timely refinancing.

Moody's also views the merger - which completed in March 2017 - of
Vedanta plc's subsidiary, Vedanta Ltd. (unrated), with the cash-
rich and debt-free oil and gas subsidiary, Cairn India Ltd. (CIL,
unrated), as a major positive step towards simplification of the
group's complex structure.

While Vedanta's shareholding in Vedanta Ltd. dropped to 50.1% from
62.9% following the merger, the group's liquidity has improved
significantly. Following the merger - which gave Vedanta Ltd.
access to CIL's $4.1 billion in cash holdings at March 2017, as
well as cash flow generation - Vedanta reduced its consolidated
gross debt by about $2.0 billion.

Despite some reduction in gross debt, lower than expected cash
flow generation resulted in a slower pace of deleveraging.
Vedanta's gross adjusted leverage of 4.9x at March 2017, and 4.2x
at June 2017 was higher than Moody's earlier expectations and
exceeded Moody's tolerance for the rating of 4.0x.

In addition, higher-than-expected dividend payments resulted in
the ratio of adjusted cash from operations less dividend/ adjusted
debt dropping below the rating tolerance level of 12.5%.

Vedanta's management has confirmed the repayment of $0.4 billion
of debt in July 2017, and plan to repay the remainder of Hindustan
Zinc Ltd.'s (unrated) short term loan of $1.1 billion by September

Continued reduction in gross debt along with improving
profitability and enhanced earnings will drive a correction in
Vedanta's gross adjusted leverage to 3.7x - 4.0x by March 2018.

Any delay in the execution of its deleveraging plans, either due
to a lower level of permanent debt reduction or weaker earnings
growth, such that leverage remains above 4.0x, could lead to
negative ratings pressure.

The two-notch differential between the CFR and the bond rating
reflects the absence of up-stream guarantees from the operating
subsidiaries and the deep subordination of the bond holders to
debt at the operating subsidiaries. Vedanta itself has extremely
low cash holdings and has no tangible operating assets.

Moody's would consider narrowing the notching between the CFR and
the bond rating if total priority debt falls below 35%-40% of
total consolidated debt and below 15%-20% of total group assets.
At March 31, 2017, these ratios stood at 66% and 38% respectively.
Moody's would also consider the holdco's liquidity and coverage
metrics in deciding whether to narrow the notching.

In addition, Moody's would consider narrowing the notching if the
holdco's interest coverage exceeds 1.0x on a sustained basis.

The stable rating outlook reflects Moody's expectation that
Vedanta's operating and financial metrics will improve with
recovering commodity prices. In particular, Moody's expects that
its earnings expansion will increase the pace of correction in the
company's leverage.

The rating could experience positive momentum if the improvement
in commodity prices is sustained, such that Vedanta continues to
generate positive free cash flow and further reduces its debt
levels, thereby improving leverage.

Financial indicators that could lead to an upgrade include
adjusted leverage below 3.0x-3.3x, EBIT/interest above 2.5x, and
cash flow from operations less dividends/adjusted debt above 15%,
all on a sustained basis, while generating positive free cash

Moody's does not anticipate downward rating pressure over the next
12-18 months, given the stable outlook.

Nevertheless, the ratings could come under negative pressure if:
(1) commodity prices turn weak again, such that Vedanta's
consolidated adjusted 12-month EBITDA drops below $3.5 billion,
despite its efforts to ramp up shipments; (2) the company is
unable to sustain and improve its cost reduction initiatives, such
that profitability weakens, with its consolidated EBIT margin
falling below 8% on a sustained basis; and/or (3) its financial
metrics weaken.

Credit metrics indicative of a downgrade include adjusted
debt/EBITDA in excess of 4.0x, EBIT/interest coverage below 2.0x,
or cash flow from operations less dividends/adjusted debt below

An adverse ruling with respect to CIL's disputed $3.2 billion tax
liability would also exert negative pressure on the rating.

The principal methodology used in this rating was the Global
Mining Industry published in August 2014.

Headquartered in London, Vedanta Resources plc is a diversified
resources company with interests mainly in India. Its main
operations are held by Vedanta Limited, a 50.1%-owned subsidiary.
Through Vedanta Resources' various operating subsidiaries, the
group produces zinc, lead, silver, aluminum, iron ore and power.

Listed on the London Stock Exchange, Vedanta Resources is 69.9%
owned by Volcan Investments Ltd. For the year ended March 2017,
Vedanta Resources reported revenues of $11.5 billion and operating
EBITDA of $3.2 billion.


GAJAH TUNGGAL: S&P Places CCC LT CCR on CreditWatch Developing
S&P Global Ratings placed its 'CCC' long-term corporate credit
rating on PT Gajah Tunggal Tbk. on CreditWatch with developing
implications. S&P said, "At the same time, we placed our 'CCC'
issue rating on Gajah Tunggal's outstanding senior secured debt
and our 'axCCC' ASEAN regional scale rating on the company on
CreditWatch with developing implications.

"We also assigned our 'B-' issue rating to Gajah Tunggal's
proposed issuance of U.S. dollar-denominated senior secured notes
due 2022. The company is an Indonesia-based tire manufacturer.

"We placed the ratings on CreditWatch with developing implications
because Gajah Tunggal's proposed bond transaction, if successful,
will reduce the refinancing risk on its bonds maturing February
2018. Conversely, refinancing risk will increase further, in our
opinion, if the transaction does not proceed as planned or is

"Our 'CCC' corporate credit rating on Gajah Tunggal currently
reflects the high refinancing risk associated with US$500 million
in U.S. dollar-denominated notes maturing early next year. The
company secured US$250 million in a committed syndicated bank loan
a few days ago. However, that bank loan is conditional upon
raising additional bonds to refinance the existing notes. Gajah
Tunggal concomitantly announced a debt capital market transaction
for these bonds."

A successful bond issuance over the next four weeks will reduce
refinancing risk because Gajah Tunggal will be able to lengthen
its debt maturities to an average of about four years. The
proposed bonds would mature in mid-2022 and US$250 million in bank
loans would start amortizing US$37.5 million in 2018, and US$50
million-US$60 million annually between 2019 and 2022. S&P said,
"We expect to raise the corporate credit rating on Gajah Tunggal
to 'B-' as well if the bond transaction proceeds as planned in
terms of amount and timing--within the next four weeks.

"We believe Gajah Tunggal's credit profile will remain constrained
by the company's modest size as a regional tire manufacturer,
margin sensitivity to raw material prices and currency
fluctuations, relatively thin cash flow adequacy ratios and
liquidity, and immaterial discretionary cash flows in our forecast
over the next two years at least, even if the refinancing
initiative is successful. We project a ratio of funds from
operations (FFO) to debt at 12%-15% through 2018, and Gajah
Tunggal's EBITDA interest coverage will be 2.5x-3.0x on the basis
of our margin assumptions. Our debt computation includes the
company's fairly sizable unfunded pension liabilities.

"We project minimal cash accumulation over the next 24 months,
given our forecast of negative discretionary cash flows in 2017.
That is because of residual spending on the expansion of the
company's facilities for making truck and bus radial tires.
Although capital spending is likely to reduce in 2018 after the
expansion is completed, we believe working capital requirements
will remain elevated. This is due to Gajah Tunggal's intention to
develop its export markets, especially in North America, where
payment terms are longer than in domestic markets. Most of the
revenue growth in 2016 and the quarter ended March 31, 2017, came
from the North American market. GITI Tire Global Trading Pte.
Ltd., a related party, accounted for about 22.3% of Gajah
Tunggal's total revenue for the three months ended March 31, 2017.
Receivables from GITI increased substantially to reach about
Indonesian rupiah (IDR) 1,560 billion as of March 31, 2017,
compared with about IDR470 billion as of Dec. 31, 2015."

Gajah Tunggal recently recalled about 395,000 tires in North
America in June 2017 -- the second in 12 months after a recall of
250,000 tires in 2016. The company has not publicly indicated the
cost of the latest recall, but S&P does not expect the recall
provision to exceed US$20 million in 2017, based on the cost
associated with the 2016 recall. That number is manageable, given
S&P's base-case EBITDA of US$160 million-US$180 million annually
through 2018.

Gajah Tunggal expects to issue the proposed bonds at the company
level (instead of raising the funds through a special purpose
vehicle). The proceeds would be applied toward refinancing the
maturing notes. The proposed terms and conditions of the
transaction are mostly similar to the previous notes. The note
covenants are not materially different from the existing notes,
with a fixed charge coverage ratio of 2.75x needed for the company
to raise more debt. Allowed debt carve-outs (incremental debt
permitted in the covenants), at US$135 million, are larger than
under the previous bonds. This allows for potentially higher
working capital requirements, depending on the pace of the revenue
growth in export markets.

The CreditWatch with developing implications reflects the
possibility of either a positive or negative rating action over
the next four weeks, depending on the progress of the company's
refinancing initiatives.

S&P said, "We may downgrade the company if the proposed bond
transaction is unsuccessful or delayed beyond August. We will also
likely lower the rating if the company undertakes capital market
transactions related to its 2018 notes that we assess as
constituting a distressed exchange, including capital market
purchases below par value.

"We may raise the rating if Gajah Tunggal obtains funding to fully
refinance the notes maturing in 2018. We view refinancing risk as
the primary pressure on the company, and a removal of this risk
would likely lead to a multiple-notch upgrade. We expect to raise
the rating on Gajah Tunggal to 'B-' after the successful placement
of the proposed US$250 million loan and bond transaction."

MEDCO ENERGI: Fitch Assigns B First-Time Long-Term IDR
Fitch Ratings has assigned a first-time 'B' Long-Term Issuer
Default Rating (IDR) with a Stable Outlook to Indonesian oil & gas
producer PT Medco Energi Internasional Tbk (Medco). The agency has
also assigned an expected rating of 'B(EXP)' and a Recovery Rating
of 'RR4' to the proposed US dollar notes issued by Medco's wholly
owned subsidiary Medco Strait Services Pte Ltd, and guaranteed by
Medco and several of its subsidiaries. The notes are rated at the
same level as Medco's IDR as they constitute direct unsubordinated
unsecured obligations of the company.

The final rating on the notes is contingent upon the receipt of
final documents conforming to information already received.


Small Oil & Gas Producer: Medco's ratings reflect its business
profile as a small upstream producer, with proved (1P) reserves of
247 million barrels of oil equivalent (mmboe) and proved and
probable (2P) reserves of 390 mmboe; 70% of proved reserves were
developed as of end-2016. Its 1P reserve life stood at nine years
at end-2016. Medco has mostly controlling interests in six fields
in Indonesia from which it derives nearly 90% of production. It
also has a small international presence in Oman, the US and

Growth from Acquisitions: Medco purchased a 40% stake in the South
Natuna Sea Block B in 2016, with 32 mmboe of 2P reserves. It also
boosted its stake in Block A Aceh deposit by 41%, to 85% - with 2P
reserves of 34 mmboe. Medco achieved a higher production run-rate
of 90 million barrels per day (mbpd) in 1Q17 (2016: 66 mbpd),
supported by the acquisition of Block B. Fitch expects a
production rate of around 80 mbpd over the next three to four
years. Medco plans around USD300 million-350 million in annual
capex in the next two years - nearly half to develop phase one of
Block A in Aceh, with the first gas likely in 2018.

Fixed-Price Gas Sales: Around 35% of EBITDA in 2017 will be
derived from upstream gas production which is sold based on fixed-
price take-or-pay contracts with the Indonesian state. A further
36% stems from take-or-pay gas contracts indexed to crude oil
prices, with in-built annual price escalations, contracted with
large overseas counterparties. The existing contracts have tenors
of 10-15 years, and their fixed or indexed-pricing and take-or-pay
nature reduces the volatility of operating cash flows to an

High Leverage to Moderate: Fitch expects FFO adjusted net leverage
to improve to 4.7x by end-2018 (end-2016: 15.5x). Deleveraging
will be supported by higher production from recent acquisitions,
as well as Fitch expectations for a gradual rise in crude oil
prices over the next four years. Lower costs will also help
deleveraging. Cash costs per barrel (bbl) have also come down
considerably, to USD8.9 per bbl in 2016 (2015: USD12 per bbl), due
to ramping up production and cost-containment efforts.

The company is also working on a number of measures to reduce
leverage faster than Fitch currently expects. These include a
rights issue of USD150 million targeted for 4Q17, as well as the
disposal of non-core assets of more than USD600 million over the
next 12-18 months.

Mining Investment - Limited Impact: High leverage is also due to
USD404 million paid to purchase a 41.1% stake in PT Amman Mineral
Nusa Tenggra (AMNT), which owns the Batu Hijau gold and copper
mine. Medco has also advanced USD246 million to the mine as part
of the acquisition process, and guaranteed 50% of the acquisition
debt. Fitch has included the guaranteed debt in leverage.

However, the acquisition loan is being paid down gradually, using
the mine's existing cash balances. Medco expects its guarantee
liability to fall to USD187 million by end-2017 as a result, and
to be fully repaid by mid-2018. Fitch expects no significant cash
inflows into Medco from AMNT over the medium term.

Power Business Investments Factored in: Fitch has included in
Fitch ratings case Medco's USD88 million investment in its 49%-
joint venture PT Medco Power Indonesia (MPI), which is spread
across the next four years. This is its share of a total USD175
million capex plan at MPI which will fund new power plants at MPI
with additional capacity of 685 megawatts. Fitch also considers it
likely that Medco will purchase a further 39.6% effective stake in
MPI from PT Saratoga Power, in the event that the latter sells out
as currently envisaged. Fitch's forecasts include an estimate for
the value of Saratoga's stake, along with Saratoga's estimated
contribution to MPI's medium-term capex.

These investments are outside of the proposed bond's restricted
group structure, and are allowed so long as aggregate investments
do not exceed 15% of the restricted group's total assets (around
USD400 million at end-2016).

Fitch will continue to treat MPI as an equity-investment when
assessing Medco's credit risk, even if Medco purchases a
controlling stake. This is because MPI's operations are largely
project-financed on a non-recourse basis, and because there are no
cross-default clauses linking MPI's debt to Medco, which limits
fungibility of cash flows. Furthermore MPI's business profile is
sound, and it is able to finance its own operations except for the
new power plants in development.


Medco's 'B'/Stable Long-Term IDR compares well with upstream oil &
gas producers rated in the 'B' rating category. The business risk
profile is similar to that of PT Saka Energi Indonesia Tbk, which
is assessed at 'B+' on a standalone basis. Medco has a larger
production base and proved reserves, longer reserve life, and a
similar mix of operating cash flows stemming from fixed-price gas
contracts. However Fitch expects Saka's production base and
reserves to catch up with Medco in the next two years. On the
other hand, Medco's leverage is considerably higher than that of
Saka. As a result Saka's standalone rating is one notch higher
than Medco.

Medco is rated in line with Kosmos Energy Ltd. (B/Stable) in the
US. Medco's business risk profile is considerably stronger than
that of Kosmos on account of larger proved reserves and production
volumes, and lower production costs. This is counterbalanced by
Medco's higher leverage.


Fitch's key assumptions within Fitch ratings case for the issuer

- Brent Crude oil price to average USD52.5/bbl in 2016,
   USD55/bblin 2017, USD60/bbl in 2018, and USD65/bbl thereafter
- Oil & gas production of 25.8 mmboe in 2017, 28.3 mmboe in
   2018,26.6 mmboe in 2019, and 27.3 mmboe in 2020
- Cash operating costs per mmboe to remain between USD12-13
- Annual capex of around USD300 million-350 million in 2017 and
   2018, including USD88 million into MPI
- USD130 million purchase of Saratoga's stake in MPI, together
   with USD70 million of further capex investments spread across

Fitch's key assumptions for bespoke recovery analysis include:

- The recovery analysis assumes that Medco would be considered
   a 'going concern' in bankruptcy and that the company would
   be reorganised rather than liquidated. Fitch has assumed a 10%
   administrative claim.

- Medco's going-concern EBITDA is based on expected 2018 EBITDA
   which Fitch feel reflects sustainable production levels and
   factors in a USD55/bbl crude oil price - which is closer to
   Fitch's long-term price expectation of USD65/bbl than the
   depressed levels at present. It also captures production from
   Medco's new oil & gas assets. However, the going- concern
   EBITDA is about 25% below expected 2018 EBITDA to reflect the
   risks associated with oil price volatility, potential
   challenges in maintaining production of maturing fields,
   and other factors.

- An enterprise value (EV) multiple of 5.5x is used to calculate
   a post-reorganisation valuation and reflects a mid-cycle
   multiple for oil & gas and metals & mining companies globally,
   which is somewhat higher than the observed lowest multiple of
   4.5x. The higher multiple took into consideration that most of
   Medco's production volumes stem from long-term fixed-price and
   indexed take-or-pay gas contracts which provide greater cash
   flow visibility across economic cycles than for the average
   global upstream oil & gas production company.

- Fitch has assumed secured and prior ranking debt of USD428
   million to be repaid before Medco's senior unsecured
   creditors, including the investors of the proposed US dollar
   bonds. Prior ranking debt includes project-finance debt at
   non-guarantor subsidiaries PT Medco E&P Tomori Sulawesi, and
   PT Medco E&P Malaka.

- The payment waterfall results in a 73% recovery corresponding
   to a 'RR2' recovery for the USD450 million unsecured notes.
   However, Fitch has rated the senior unsecured bonds
   'B(EXP)'/'RR4' because Indonesia falls into Group D of
   creditor-friendliness under Fitch Country-Specific Treatment
   of Recovery Ratings criteria, and the instrument ratings of
   issuers with assets in this group are subject to a soft cap
   at the issuer's IDR.


Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Ability to sustain FFO adjusted net leverage at less than
   4.0x, while maintaining its current business risk profile

Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- A sustained increase in FFO adjusted net leverage to over
- A sustained decline in Medco's oil & gas business risk
   profile, or a significant weakening in liquidity

MEDCO ENERGI: Moody's Assigns (P)B2 CFR; Outlook Stable
Moody's Investors Service has assigned a provisional (P)B2
corporate family rating (CFR) to Medco Energi Internasional Tbk

At the same time, Moody's has also assigned a provisional (P)B2
rating to the proposed USD-denominated backed senior unsecured
bonds to be issued by Medco Strait Services Pte. Ltd., a wholly-
owned subsidiary of Medco. The proposed bonds are irrevocably and
unconditionally guaranteed by Medco and some of its subsidiaries.

The ratings are provisional and dependent on the successful
completion of the proposed bond issuance. The proceeds will be
used for the repayment of debt maturing over the next 12 months
and will improve the company's liquidity profile.

The outlook on the ratings is stable.


"The ratings reflect Medco's modest, but improving scale of
production and reserves of oil & natural gas, which are in various
stages of production and development. The ratings also reflect a
modest degree of visibility on the company's cash flow from sales
agreements for natural gas at fixed prices, and which will account
for 25-30% of its total production volumes over the next 2-3
years," says Vikas Halan, a Moody's Vice President and Senior
Credit Officer.

Medco has six producing blocks in Indonesia and had an average
daily production volume of 57.7 thousand barrels of oil equivalent
per day (mboepd), excluding service contracts, in 2016. The
company is in the process of developing its Block A asset in Aceh,
as well increasing production from its recently acquired Block B
asset in the South Natuna Sea. Production, excluding service
contracts, has already increased to 82.6 mboepd in Q1 2017.

Gas accounted for about 62% of Medco's sales in 2016 and the
proportion will likely remain at similar levels over the next 2-3
years. All the company's natural gas sales are under long-term
contracts and about half are under fixed-price contracts, which
provide high visibility on revenue and some resilience to oil-
price declines.

"At the same time, the ratings are constrained by Medco's high
leverage, which has increased over the last two years as the
company has invested about $1.2 billion, principally in Indonesian
mining, and oil & gas assets," says Halan, who is the lead analyst
for Medco at Moody's.

Medco's adjusted debt/EBITDA was 6.8x, retained cash flow
(RCF)/adjusted debt was 7%, and EBITDA/interest was 2.7x for 2016.
These credit metrics are weak for its ratings. Credit metrics
improved in Q1 2017 with increase in production. Adjusted debt/
EBITDA improved to 5.2x, RCF/ adjusted debt improved to 8.6% and
EBITDA/ interest improved to 3.2x for the twelve months ended
March 2017.

The company expects to improve its credit metrics over the next 12
to 18 months via a) selling some of its non-core assets, including
the Energy Building in Jakarta and its coal mining assets for
about $500 million, b) a rights issue for its equity shares to
generate $150 million, and c) an IPO of its copper and gold mining
business that should provide sufficient funds for repayment of the
$246 million in shareholder loans that Medco has provided.

"The company's deleveraging plan will reduce its leverage
significantly. However, the execution of the plan remains exposed
to market conditions and regulatory approval, which can cause
delays in timing and a reduction in valuations," says Halan.

"Nonetheless, the ratings incorporate Moody's expectations that
Medco will remain committed to its deleveraging plan and will not
increase its borrowings further. Moody's expects that it will be
successful, at least partially, on executing this plan, such that
its credit metrics will improve over the next 12--18 months with
adjusted debt/EBITDA falling below 5.5x, RCF/adjusted debt of at
least 10%, and EBITDA/interest of at least 3x," says Halan.

Moody's notes that Medco's power business, Medco Power Indonesia
(P.T.) (MPI, 49% owned, unrated) and mining business, Amman
Mineral Investama (P.T.) (AMI, effectively 41.1% owned, unrated),
are not part of the restricted group, and that they will continue
to operate as independent entities with no financial support from,
or recourse to, Medco over and above the committed equity

Further, Moody's has assumed these businesses will not pay any
meaningful dividends over the next 2-3 years. Therefore, Medco's
ratings currently do not incorporate any cash inflows from these
businesses as well.

Medco's liquidity profile is weak with cash and cash equivalents
of $184 million as of March 31, 2017 against debt maturing of $481
million over the next 12 months. The proceeds from the proposed
bond issue and the plannedpaw rights issue will improve liquidity
to more comfortable levels. Medco also has a long track record of
refinancing its bank loans with strong access to domestic banks.

The stable outlook incorporates the expectation that production
growth from Medco's existing fields will improve cash flows and
company will remain committed to deleveraging, such that its
credit metrics will improve to levels more appropriate for its
ratings over the next 12-18 months.

The ratings will be downgraded if Medco a) fails to complete its
proposed bond issuance or the size of the issue is not large
enough to improve its liquidity profile, b) fails to execute its
deleveraging plan or there are material delays in implementation,
c) makes any material debt-funded acquisitions before completion
of the debt reduction exercise, and d) provides funding support to
its mining or power businesses.

Specifically, the ratings will be downgraded, if its credit
metrics fails to improve over the next 12-18 months, such that
adjusted debt/ EBITDA increases above 5.5x, RCF/ adjusted debt
falls below 10%, and EBITDA/interest expenses falls below 3x.

Upward pressure on the ratings over the next 12-18 months is
limited, given the weak credit metrics and liquidity profile. The
ratings could be upgraded after completion of the debt reduction
plan if a) adjusted debt/EBITDA falls below 4.5x, RCF/adjusted
debt increases above 15%, and EBITDA/interest expenses increase
above 4x, and b) cash and cash equivalents cover at least the
amount of debt maturing over the next 12 months, all on a
sustained basis.

The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.

Established in 1980 and headquartered in Jakarta, Medco Energi
Internasional Tbk (P.T.) (Medco) is predominantly an oil and gas
exploration and production (E&P) company with additional
operations in downstream oil and gas activities, power generation,
and copper, gold and coal mining. Medco reported proved developed
reserves of 136.6 mmboe as of March 31, 2017, and oil and gas
production volumes of 64.1 mboepd (excluding service contracts)
for twelve months ended March 31, 2017.

Medco has been listed on the Jakarta Stock Exchange since 1994. It
is 35.7% owned by Encore Energy Pte. Ltd. (unrated), 20.7% by Clio
Capital Ventures (unrated), and 10% by Mitsubishi Corporation (A2
negative). 26.3% of Medco is publicly owned, with the balance
owned by other investors.

MEDCO ENERGI: S&P Assigns 'B' CCR; Stable Outlook
S&P Global Ratings assigned its 'B' long-term corporate credit
rating to Indonesia-based oil and gas exploration and production
(E&P) company PT Medco Energi Internasional Tbk. (Medco). The
outlook is stable.

S&P said, "At the same time, we assigned our 'B' issue rating to
the U.S.-dollar-denominated senior unsecured notes that Medco
Strait Services Pte. Ltd., a wholly owned subsidiary of Medco,
plans to issue. Medco unconditionally guarantees the notes. The
issue rating is subject to our review of the final issuance

"Our ratings on Medco reflect the company's modest oil and gas
production and reserve scale, concentrated cash flows from a few
fields in Indonesia, and elevated investment appetite despite high
leverage. Tempering these weaknesses are Medco's growing cash
flows as new fields ramp up, the company's sound control on costs,
creditworthy counterparties, and good standing in credit markets.

"We regard Medco's narrow operating diversity as one of the key
constraints for its credit profile. We expect the company's oil
and gas production (excluding the service contracts) will average
about 75,000 barrels of oil equivalent per day (boepd) over next
two to three years. This will be supported by ramp-ups of
production in two new fields--South Natuna Sea Block B (SNSB,
acquired in 2016) and Block A in Aceh (under development). The
company's top-three blocks (including the above two) will make up
about 80% of its production and cash flows. More than 95% of its
cash flows are generated from assets in Indonesia."

Medco's reserve life for its Indonesian operations, of about six
years on its proven reserves, is comparable with that of peers'.
The company has a fair track record in replenishing reserves
through in-house exploration and development, and occasional
acquisitions. Medco's gas-heavy production is sold through long-
term fixed price contracts (with annual escalation) to
creditworthy counterparties--such as PT Pertamina (Persero), PT
Perusahaan Listrik Negara (Persero), Petroliam Nasional Bhd.
(Petronas), Sembcorp Gas Pte Ltd. This sales structure and
customer base supports the company's healthy profitability and
growth in future cash flows.

Medco's strategy for the oil & gas segment is to invest
selectively. S&P believes the Indonesian government's hydrocarbon
policies are evolving with a gradual shift from traditional
production-sharing contracts to a gross-split approach in which
revenue-sharing starts earlier, but cost recovery is delayed until
the latter part of the field's life. The policy is yet to be fully
tried and tested. Medco is focused on monetizing its existing E&P
assets rather than on new exploration. None of the company's
blocks are up for production-contract renewal over the next three
years, which limits Medco's regulatory exposure.

Medco's strategy to broaden its operating profile to include power
and mining (i.e., upstream and downstream) is relatively untested.
The key mining asset is the Batu Hijau copper and gold mine in
Indonesia; Medco acquired an effective 41% stake in this mine for
US$650 million in 2016. Medco will not consolidate its mining
business into reported financials. However, Medco has provided a
joint guarantee to a loan at the mining asset, and S&P includes
this obligation, pro-rata (US$240 million as per Medco's share) in
S&P's calculation of Medco's adjusted debt.

The Batu Hijau mine needs material investments over next the next
two to three years for the next phase of mine development and for
the construction of a smelter. S&P said, "We have assumed that
Medco will not provide any further financial support to the mining
business, which will function in a self-reliant manner, and raise
any future needs on its own. Further investments in mining are an
event risk to Medco's credit profile.

"We think Medco could increase its ownership in PT Medco Power
Indonesia to a majority stake and maintain operating control.
Hence we consolidate the power business in our operating and
financial assessment of Medco. We note that capital expenditure
(capex) needs in the power business could be relatively high at
about US$200 million a year. Still, Medco Power's leverage profile
is similar to that of Medco's own and the contribution of cash
flows from Medco Power is relatively small, at less than 20% of
E&P cash flows. Hence inclusion of Medco power does not materially
influence our view of Medco's credit profile.

"Medco's leverage is high and, in our estimation, debt ratios will
remain high despite strong cash flow growth. In 2017, cash flows
will expand on the back of rising production of SNSB; in 2018, due
to the ramp-up in Block A (notwithstanding execution risk). Still,
planned capex will consume all the operating cash flows, thereby
increasing the debt. We expect the ratio of funds from operations
(FFO) to debt will reach 9% by 2018-19, from 5.3% in 2016.
However, we expect Medco's interest cover ratios will remain
comfortably above 2.0x.

"While we consider all planned capex in our leverage assessment,
we note that Medco maintains flexibility in its investment plans.
For example, we expect that Medco could increase its stake in the
power segment, but the company is not contractually committed to
do so. Medco further maintains willingness to divest noncore
assets to support its liquidity and leverage profile, were such
needs to arise.

"The stable outlook on Medco reflects our view that it will
successfully ramp up production from new fields such that its
growing cash flows support FFO interest coverage remaining above
2.0x sustainably. We expect Medco will successfully refinance its
maturities and will not materially increase its investment plans
in a manner which jeopardizes liquidity or slows the improvement
in leverage.

"We could lower the rating if we see Medco facing difficulties in
refinancing its debt or complying with its financial covenants. We
could also lower the rating if we see slower cash flow growth
coupled with an increase in planned investments that results in
weakening leverage, as indicated by its FFO interest coverage
ratio falling below 1.75x.

"We are unlikely to raise our ratings on Medco over the next 12-15
months due to its elevated capex plans and relatively weak
interest-coverage profile. We could however raise our ratings if
we see Medco contain its investments while its cash flow meets our
expectations, resulting in the ratio of FFO to debt crossing 12%
on a consistent basis. An upgrade would also be contingent upon a
track record of no further investments in mining assets."

TUNAS BARU: Fitch Publishes BB- Long-Term Issuer Default Rating
Fitch Ratings has published Indonesia-based palm oil and sugar
producer PT Tunas Baru Lampung Tbk's (TBLA) Long-Term Foreign-
Currency Issuer Default Rating (IDR) of 'BB-' with a Stable
Outlook and its senior unsecured rating of 'BB-'.

Fitch has also assigned the proposed Singapore-dollar senior
unsecured notes to be issued by TBLA International Pte. Ltd., a
wholly owned subsidiary of TBLA, an expected rating of 'BB-(EXP)'.
The notes will be guaranteed by TBLA and all its majority-owned
operating subsidiaries and the proceeds are intended to be used
mainly for refinancing existing debt. The final rating is subject
to the receipt of final documentation conforming to information
already received.

TBLA's rating is driven by its position as one of the few players
in Indonesia whose operations span the entire sugar value chain.
The regulatory environment for sugar in Indonesia is beneficial to
TBLA given its efficient operations, and Fitch expects increased
sugar sales to boost cash flows and provide benefits of
diversification from its small, albeit diversified, palm oil
operations. TBLA's leverage is at the upper end of the range for
its rating, but Fitch expects leverage to decrease quickly with
the start of its sugar mill.


Sugar Mill to Boost Profitability: TBLA started sugarcane
plantation in 2012, and its refinery began operations in 2013. Its
sugar mill near its plantations in Lampung, in the southern part
of Sumatra, started operations in April 2017. The sugar industry
in Indonesia is regulated, and the government sets a floor for
sugar prices to encourage domestic production. TBLA has benefitted
from this industry structure, which gives new, more efficient and
vertically integrated entrants like the company a robust profit

Availability of land for sugarcane plantations in the drier
regions of South Sumatra and Java is a key barrier to entry, and a
competitive advantage for TBLA, which is recycling some of its oil
palm acreage in Lampung into sugarcane plantations. The company's
investment in the green-field sugar mill contributed to negative
FCF and relatively high leverage in 2015-16. However, cash flows
and leverage should improve from 2017 with the start of operations
at the mill. In addition to better overall profitability, TBLA's
operating profile is also likely to improve due to lower exposure
to the more volatile palm oil products business.

Robust Prospects for Sugar Producers: Indonesia's domestic mills
produce less than half of the country's sugar demand. Domestic
output has stagnated over the last few years, despite rising
demand, and the government has raised the minimum price to
encourage output. Given the supply deficit, retail sugar prices
were significantly higher than the floor price in 2016, which
allowed refiners that process imported raw sugar, such as TBLA, to
earn EBITDA margins of around 30%. Profitability for vertically
integrated and efficient mill operations would be even better.
Fitch expects Indonesia's domestic supply deficit to persist over
the medium term, supporting margins of sugar producers.

Small, Well-Diversified Palm Operations: TBLA owned around 40,000
hectares of planted palm acreage at end-2016, and is one of the
smallest palm oil companies in Fitch's rating universe in terms of
planted area. Around 80% of its acreage is in the southern part of
Sumatra (Lampung and Palembang), with the rest in Kalimantan
(Pontianak). Its fresh fruit bunch (FFB) yield in 2016 of 12
tonnes per hectare of mature acreage was below the industry
average, but Fitch expects yields to improve in 2017 with improved
weather conditions. Over the longer term, yield should improve
further due to TBLA's relatively young plantation profile, with
around 50% of its planted acreage comprising immature and young
trees (0-8 years old).

Despite TBLA's small scale, its operations are well-diversified in
terms of products and distribution channels. Over 50% of its palm
oil product sales are downstream products, mainly cooking oil. The
diversification provides TBLA flexibility to produce the more
profitable products, and also lowers the earnings volatility.

Healthy CPO Prices: Malaysian free-on-board (FOB) spot prices for
crude palm oil (CPO) have averaged around USD660/tonne so far in
2017, higher than USD641/tonne in 2016 and around USD500/tonne at
end-2015. Low output since 2016 due to dry weather and a
subsequent fall in inventory levels have boosted prices while
demand has been robust. Fitch expects CPO prices to be constrained
over 2017 with output and inventories showing signs of a rebound
due to more favourable weather. However, average prices in 2017
are still likely to be better than in 2016 and would supplement
higher palm oil output for producers like TBLA.

Leverage to Improve: Fitch expects TBLA's net adjusted debt to
EBITDAR leverage to fall to below 2.5x by 2018, from 2.6x in 1Q17
and 4.0x in 2016. Profitability is likely to widen and capex
should decline following the completion of the company's sugar
mill in 2017, supported by healthy sugar and CPO prices. TBLA's
working capital flows have been volatile, with a large outflow in
2016. TBLA built up raw sugar inventories in 2016, following the
grant of import quotas during the year, after no quotas were
granted in 2015. Fitch believes such variations are unlikely to be
sustained. TBLA's credit profile would be negatively affected if
its cash flows remain volatile.

Secured Debt Leverage to Fall: Around 65% of TBLA's consolidated
debt at end-2016 was secured, resulting in a secured debt/EBITDA
ratio of 2.6x. However, Fitch expects the ratio to drop to below
2.0x by end-2017, factoring in refinancing from proceeds of the
proposed unsecured notes. Fitch accordingly rate the senior
unsecured debt and the notes at the same level as the IDR, in line
with Fitch criteria.


A close peer for TBLA is Indonesia's PT Japfa Comfeed Indonesia
Tbk (Japfa, BB-/Stable), whose rating is supported by the earnings
stability provided by its animal-feed segment, which forms around
35% of its overall revenue. TBLA and Japfa are comparable as the
sugar segment lends stability to TBLA and significantly offsets
the volatility of its palm oil segment. Fitch expects the sugar
segment to contribute more than 35% of TBLA's revenue from 2017.
While Japfa's leverage is lower, Fitch expects TBLA to deleverage
quickly over the next two years resulting in a financial profile
consistent with its rating.


Fitch's key assumptions within Fitch ratings case for the issuer
- Malaysian benchmark CPO prices of USD665/tonne in 2017 and
   USD675/tonne over the long term
- Revenue growth of 30% in 2017 and 20% in 2018 mainly driven by
   higher sugar sales and better CPO prices
- EBITDA margin to improve to around 24% in 2017-18, from 22% in
- Capex to decline to IDR1 trillion in 2017 and around IDR750
   billion thereafter, from IDR1.6 trillion in 2016


A positive rating action is not expected given the company's
relatively small scale in both the palm and sugar businesses and
risks regarding the long-term sustainability of the protectionist
regulatory environment for the sugar industry in Indonesia.

Developments that may, individually or collectively, lead to
negative rating action includes:
- Leverage (net adjusted debt/EBITDAR) above 2.5x on a sustained
- Inability to generate positive free cash flows on a sustained
- A material weakening of regulatory protection for the sugar
   industry in Indonesia that results in weaker EBITDA margin


Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable.   Those
sources may not, however, be complete or accurate.  The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication.  Prices reported are not intended to reflect actual
trades.  Prices for actual trades are probably different.  Our
objective is to share information, not make markets in publicly
traded securities.  Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind.  It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.

A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged.  Send announcements to

Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication.  At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled.  Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets.  A company may establish reserves on its balance
sheet for liabilities that may never materialize.  The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
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Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and
Peter A. Chapman, Editors.

Copyright 2017.  All rights reserved.  ISSN: 1520-9482.

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