Moody’s Investors Service has downgraded the corporate family rating of plantation firm, PT Sawit Sumbermas Sarana Tbk (SSMS) from B1 to B2. Currently, the company manage an integrated business across 19 oil palm estates, six oil palm mills and one palm kernel mill out of Pangkalan Bun, Central Kalimantan. Moody’s also downgraded the senior unsecured rating on the US$300 million notes issued by its wholly owned subsidiary, SSMS Plantation Holdings Pte. Ltd., to B2 from B1. The outlook is maintained at negative.
Sawit Sumbermas‘ rating reflects the credit quality of its parent, PT Citra Borneo Indah (CBI), which consolidates SSMS. CBI’ credit metrics have weakened in recent years, in part due to elevated capital spending to construct its downstream operations, consisting of a palm oil refinery and industrial park.
The downstream refinery has faced challenges since commencing operations in mid-2018 primarily driven by insufficient tankage capacity to store its feedstock and finished product, resulting in production bottlenecks and higher per unit costs.
