S&P Global Ratings raised the long-term issuer credit rating of Indonesia's PT MNC Investama Tbk to B- from D, with a stable outlook.

The rating agency said May 11 that the upgrade comes after the company completed an exchange offer and placement of US$231 million of 9% senior secured notes. The notes are due in 2021 and extend the company's debt maturity by three years.

The rating agency also expects the company's US$115 million of subordinated debt to be converted into equity within the next few weeks after the debt exchange is finalized.

S&P said that while it does not expect a specific default scenario over the next 12 to 18 months, it believes execution risks will remain as the viability of the company's capital structure will depend on its ability and willingness to execute strategic initiatives, particularly the sale of its coal operations and a stake in PT MNC Kapital Indonesia Tbk.

MNC Investama's rating reflects S&P's view of the company's aggressive management strategy and weak liquidity at the holding company level in the absence of asset and stake sales. It also reflects the company's ongoing sensitivity of servicing the anticipated capital structure with dividends from operating companies, barring asset sales.

The stable outlook takes into account the rating agency's view that the operational performance of MNC Investama's operating subsidiaries will remain solid over the next 12 months.

If MNC Investama fails to execute its planned stake and asset sales within 2019, resulting in rising refinancing risk on the 2021 bonds, S&P could downgrade the company's ratings. The rating agency could upgrade the ratings if the company completes the planned sales and uses the proceeds to bolster liquidity or retire debt.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.