Moody’s assigns first-time (P)B2 ratings to PT Chandra Asri; outlook stable

Hong Kong, October 26, 2009 -- Moody's Investors Service has today 
assigned a provisional (P)B2 corporate family rating to PT Chandra Asri 
("Chandra Asri"). At the same time, Moody's has assigned a provisional 
(P)B2 senior secured bond rating to the proposed senior secured notes 
issued by Altus Capital Pte. Ltd., an entity wholly owned and guaranteed 
by Chandra Asri and its subsidiaries. The outlook on both ratings is 
stable.

This is the first time that Moody's has assigned ratings to Chandra Asri 
or to Altus Capital Pte. Ltd.. The provisional status of the ratings will 
be removed upon completion of the bond issuance.

US$157m of the proceeds from the bond issuance will be used to refinance 
outstanding debt under an existing bank facility, while the remainder 
will be used to repay an existing subordinated loan from Strategic 
Investment Holdings Ltd, a previous shareholder of Chandra Asri.

"Chandra Asri's (P)B2 rating reflects its leading position in the 
domestic petrochemicals market, which balances its small global presence. 
It also reflects the company's competitiveness in its key domestic market 
of Indonesia, which accounts for 80% of its revenue, derived from its 
vertically-integrated operations as well as a favourable import tariff 
structure," says Renee Lam, a Moody's Vice President.

"Key challenges Chandra Asri faces include the inherently cyclical nature 
of the petrochemical industry, leading to highly volatile earnings and 
cash flow. The company's upcoming capital expenditures over the next 3-4 
years, which are expected to coincide with an industry cyclical downturn 
and major capacity maintenance overhaul, are also likely to pressure its 
credit metrics," adds Lam, also Moody's Lead Analyst for the company.

Chandra Asri's liquidity profile is characterized by minimal near-term
refinancing needs post bond issuance, and improving covenant headroom.
Yet, its financial flexibility is constrained by the limited alternative
banking facilities, though the company is actively expanding its banking 
relationships with domestic financial institutions.

Additionally, the company's private shareholding structure has led to 
concerns over corporate governance, although Moody's takes comfort from 
the involvement in the company's management from Temasek Holdings 
("Temasek"), an investment holding company wholly-owned by the Ministry 
of Finance of Singapore, and 30% shareholder in Chandra Asri.

Chandra Asri's stable outlook is underpinned by its leading position in 
the domestic petrochemical industry, as well as moderate debt use, which 
should help it weather the current industry downturn.

Upward rating pressure could develop if (1) demand and prices for 
petrochemicals and feedstock stabilize, leading to improved profitability 
and cash flow; (2) the company maintains low debt leverage through 
industry cycles; and (3) it maintains its liquidity profile while 
improving its financial flexibility.

Credit metrics that will support an upgrade include adjusted Debt/Book
Capitalisation below 20-25% and adjusted EBITDA margins at above 8-12% 
on a sustained basis.

Downward pressure could emerge if market conditions deteriorate more 
steeply than currently anticipated, or if Chandra Asri increases its debt 
leverage, which could arise from new acquisitions, substantial capital 
expenditures, or shareholder returns. Such pressure may be evidenced by 
adjusted Debt/Book Capitalisation exceeding 35% or adjusted EBITDA loss 
occurring.

In addition, Moody's would be concerned should there be any change in the 
relationship between Temasek and Chandra Asri, which includes, but is not 
limited to, a substantial reduction in ownership or change in Temasek's 
involvement in management.

The principal methodology used in rating Chandra Asri was the Global 
Chemical Industry rating methodology, published in February 2006 and 
available on www.moodys.com in the Rating Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors that 
may have been considered in the process of rating this issuer can also be 
found in the Rating Methodologies sub-directory on Moody's website.