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Investing.com -- Moody’s Ratings has upgraded Medco Energi Internasional Tbk (P.T.) to Ba3 from B1 and changed the outlook to stable from positive, the rating agency announced Tuesday.
The upgrade reflects Medco’s improved capacity to absorb future acquisitions given its enhanced scale, according to Moody’s Vice President Rachel Chua. The rating also incorporates expectations that the company will maintain strong credit metrics with debt/EBITDA leverage below 3.5x and EBITDA/interest coverage exceeding 3.5x.
Moody’s also upgraded to Ba3 from B1 the ratings on outstanding backed senior unsecured bonds issued by Medco’s wholly-owned subsidiaries, which are unconditionally guaranteed by Medco.
The Ba3 corporate family rating takes into account Medco’s consistent ability to deleverage quickly after acquisitions, revenue visibility from fixed-price natural gas sales agreements (accounting for about 50% of production), and very good liquidity position.
Medco is expected to generate annual EBITDA of $1.1-$1.2 billion over the next two years, based on Moody’s medium-term oil price assumption of $55-$75 per barrel. With fixed-price gas accounting for around half of Medco’s production, the company is less vulnerable to oil price volatility compared to peers.
Since 2022, Medco has bought back approximately $1.7 billion of US dollar bonds through tender offers and secondary market repurchases, using a mixture of cash and new borrowings.
The company has spent around $2.5 billion on acquisitions since 2020, including the 54% acquisition of Corridor block in South Sumatra in 2022 and Blocks 48 and 60 in Oman in 2023. Its latest acquisition was Repsol’s 24% stake in the Corridor block for $425 million in July 2025, funded through a mix of debt and cash.
As of June 30, 2025, Medco had cash and cash equivalents of $824 million, restricted cash of $58 million, and undrawn multi-year credit facilities of $1.2 billion.
The stable outlook reflects Moody’s expectation that Medco will maintain very good liquidity and strong credit metrics over the next 12-18 months, while continuing to maintain financial discipline as it pursues growth.
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