Rating Action: Moody's assigns definitive Baa3 to Pertamina's bonds

Global Credit Research - 03 May 2012

Approximately US$2,500 million of Debt Securities Affected

Singapore, May 03, 2012 -- Moody's Investors Service has assigned a definitive Baa3 senior bond rating to the
US$1,250 million 4.875% and US$1,250 million 6% notes due 2022 and 2042, respectively, issued by PT
Pertamina (Persero).
The rating outlook is stable.
RATINGS RATIONALE
Moody's definitive rating on this debt obligation confirms the provisional rating assigned on 20th April 2012.
Moody's rating rationale was set out in a press release published on the same day.
The bond proceeds will be used for financing capital expenditures and for general corporate purposes.
The Baa3 rating combines (1) Pertamina's fundamental credit quality, as expressed in its baseline credit
assessment (BCA) of 10, which is equivalent to a Baa3 rating on Moody's global scale; and (2) its strong support
from, and dependence on, the Indonesian government (Baa3/stable) under Moody's joint default analysis (JDA)
approach for government-related issuers.
Pertamina is wholly owned by the Indonesian government.
Pertamina's ratings reflect the company's strategically important position as Indonesia's national integrated oil &
gas company, contributing significant upstream production, and accounting for all the current refining capacity in
the country. It operates at a low-cost and a moderate level of leverage. But Moody's expects leverage to rise with
the company's planned investments.
Pertamina's strengths are balanced by its exposure to the moderate regulatory risks associated with a
transitioning framework, and the execution risks associated with increasing investments in upstream exploration
and production, refineries, and potentially acquisitions.
The credit profiles of Pertamina and the Indonesian government are closely linked, given Pertamina's strategic
roles in oil & gas exploration and product distribution for the country. Additionally, the government closely
supervises Pertamina's strategies and budgets. To enable the distribution of subsidized fuels, Pertamina receives
compensation from the government. This compensation forms part of the government's annual budget.
As Pertamina's fundamental credit profile is Baa3, which is equivalent to, and already linked to, that of the
government, Moody's view of additional, exceptional, and high level government support does not result in any
further rating uplift.
The outlook on the rating is stable, reflecting the stable outlook of Indonesia's sovereign rating. At the same time,
Moody's expects Pertamina's operating and financial metrics to remain strongly supportive of its rating, despite its
ambitious capex plans.
An upgrade of the sovereign rating could trigger an upgrade in Pertamina's rating, given the close links between
the two ratings.
Conversely, Pertamina would experience downward rating pressure, if there were a downgrade in Indonesia's
sovereign rating.
The principal methodology used in rating PT Pertamina (Persero) was the Global Integrated Oil & Gas Industry
Methodology published in November 2009, and Government-Related Issuers: Methodology Update Industry
Methodology published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these
methodologies.

PT Pertamina (Persero) is a 100% Indonesian government-owned, fully-integrated oil and gas corporation, with
operations in upstream oil, gas and geothermal exploration and production, downstream oil refining, marketing,
distribution, transportation and trading of petroleum products.
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The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU
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information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is
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For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory
disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class
of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance
with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant
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action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings,
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