Indonesia: Agile Property Holdings, Perusahaan Gas Negara Perser and more

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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We view Perusahaan Gas Negara (PGN) as “Low Risk” on the LARA scale, mainly due to its indirect SOE status. PGN is 57% owned by Pertamina, which is in turn fully owned by the Indonesian government through the Ministry of State-Owned Enterprises. PGN is the dominant player in Indonesia’s natural gas transmission and distribution sector, with a near monopoly over the country’s gas pipelines. As a utilities company, PGN plays a key role in ensuring the supply of affordable gas for end-consumers and helping the country transition to cleaner energy (and away from coal).

Our assessment also considers PGN’s robust standalone financial and leverage profile. That said, the company faces declining pricing power and its margins could weaken, due to the government’s price cap on natural gas sales to industrial consumers. The PGASIJ bond has a Change of Control put at 101, in the event the government ceases to own at least a 51% stake in the company.

Our fundamental Credit Bias is “Stable”, considering PGN’s healthy financial profile and strong liquidity. Moreover, the high oil price environment would benefit its upstream operations (under Saka Energi). That said, the company faces a debt maturity wall in May 2024, when the USD 1.35 bn PGASIJ 5.125 24 and USD 405 mn SAKAEI 4.45 24 will come due.

We initiate coverage of PGN with a “Hold” recommendation.