Fitch Downgrades Garuda to ‘BBB+’; Revises Outlook to Negative

Fitch Ratings Indonesia has downgraded PT Garuda Indonesia Tbk’s (Garuda) National Long-Term Rating to ‘BBB+(idn)’ from ‘A-(idn)’. The Outlook is revised to Negative from Stable. At the same time, Garuda’s outstanding IDR2trn bonds due in 2018 have also been downgraded to ‘BBB+(idn)’ from ‘A-(idn)’. The rating downgrade reflects Fitch’s view of a sustained weakness in Garuda’s financial profile, primarily driven by currency mismatch and a high fixed-cost structure. Fitch expects Garuda’s 2014 financial ratios to breach thresholds that trigger negative rating action – FFO-adjusted leverage is likely to have risen above the 7x threshold to 11x, while FFO fixed charge