Indonesian textile company Sritex and its dollar bonds were downgraded to C from CCC- by Fitch. The downgrade comes on the back of Sritex not meeting an interest payment of $850,000 on 23rd April on its syndicated loan. Fitch said it may downgrade the ratings “further to ‘Restricted Default’ if no payment is made at the expiration of the five days.” Besides not paying interest, they added that Sritex has applied for a debt moratorium and is in a standstill negotiation with syndicated lenders regarding a $350mn loan facility. Fitch also added that the weakening cash flow generation to fund operations have weakened and expects cash flow from operations (CFO) to remain negative in 2021. This would make it difficult for the company to address its 2021 debt maturity and maintenance capex without external funding.
Sritex’s dollar bonds were slightly higher with its 7.25% 2025s and 6.875% 2024s up 0.75 and 0.13 to 28.25 and 27.76.
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