JAKARTA: Fitch Ratings has today affirmed PT Aetra Air Jakarta's (Aetra) National Long-term rating at 'A(idn)'. The outlook remains stable. The agency at the same time has also affirmed at 'A(idn)' Aetra's existing three tranches of IDR614.5 billion senior unsecured notes due in 2011, 2013 and 2015.The ratings continue to reflect Aetra's low exposure to competition as it has exclusive water service rights in the eastern part of Jakarta under a 25-year concession contract with Pam Jaya which expires in 2023. The company also benefits from a relatively stable cost structure mainly comprising labour and overhead costs. The ratings also continue to factor in the potential for high demand for clean water services in Jakarta as Aetra's service coverage ratio was just 60% at end-September 2010. This provides ample scope for demand growth, in particular from a shift from groundwater-pipe water usage (following the groundwater tariff increase in September 2009). However, Aetra's ratings continue to be constrained by uncertainties regarding the regulatory framework, and concentration risk of raw water supply from Jatiluhur reservoir.The agency notes in its report released today Aetra has no major liquidity concerns as it had a cash balance of IDR131.7bn at end-September 2010, compared to near-term maturing financial obligations of IDR97bn when the Tranche A notes fall due in March 2011. Fitch expects Aetra to fund the maturity from cash reserves.The company's stable outlook reflects Fitch's expectation that the tariff policy framework will remain stable and that Aetra will maintain credit metrics appropriate for its current ratings. Given Aetra's business risk and capex profile, an upgrade is not expected in the medium term. However, a negative rating action may be taken if there are changes in the tariff policy/regulatory framework, that would affect the company's operational and financial conditions, or if there is a prolonged disruption in the raw water supply, and/or if total adjusted net debt/operating EBITDAR exceeds 2.0x on a sustained basis.Aetra is a private water company servicing customers in east-Jakarta. The company is 95% owned by Singapore's Acuatico Pte. Ltd. For the first nine months of 2010, Aetra recorded revenues of IDR598.8 billion and an EBITDA of IDR244.4 billion. (NOM)
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