REPUBLIKA.CO.ID, JAKARTA/SYDNEY - Fitch Ratings has assigned 1 trillion IDR bonds proposed by PT Sumber Alfaria Trijaya Tbk's  'AA-(idn)'. The company is Indonesia-based small-format retailer known for its chain, Alfamart. 

At the same time, the agency assigned an 'AA-(idn)' rating to Alfamart's 2 trillion IDR bond program. The proposed 1 trillion IDR bonds will be issued under this bond program.

The bonds and bond program are rated at the same level as Alfamart's National Long-Term rating of 'AA-(idn)' as they constitute direct, unconditional, and senior unsecured obligation of the company. The rating assigned to the bond program is no assurance that bonds issued under the program will be assigned a rating, or that the rating assigned to a specific issue will be the same as that of the program  'AA' National Ratings denote expectations of very low default risk relative to other issuers or obligations in the same country. 

The default risk inherently differs only slightly from that of the country's highest rated issuers or obligations. Alfamart will use about 70 percent of the bonds proceeds for refinancing debt and the balance for working capital purposes. 

The rating reflects Alfamart's leadership in Indonesia's small-format modern retail segment - its 8,557 stores at end-2013 give it a market share of about 50 percent. With an extensive store network and strategically located distribution centers, the company benefits from economies of scale and a strong bargaining position with suppliers. 

Alfamart set another growth record in 2013 by adding almost 1,500 new stores. The higher-than-expected new store openings resulted in higher capex for 2013, however. Fitch views this favorably as it provides room for Alfamart to scale back capex in 2014, which could be necessary given expectations that Indonesia's GDP will grow at a slower pace than in previous years. 

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