Pertamina Geothermal Energy (PGEOIJ)

PGE’s current standalone credit strength should be viewed as speculative grade rather than investment grade, as indicated by Fitch’s Standalone Credit Profile of bb . The external rating of BBB- / Negative reflects not only PGE’s standalone liquidity, but mainly the parent links between PGE and PPI / Pertamina NRE and between PPI and Pertamina. It does not mean there is an explicit guarantee from the government or Pertamina. The probability that PGE’s standalone payment capacity deteriorates rapidly over the next 12 months is low, but ratings and spreads could change relatively quickly depending on the combination of parent / sovereign outlook, 2028 offshore bond refinancing, and development capex.

PGE’s strongest point is that, as of end-March 2026, it had cash of USD745.2mn, almost matching gross debt of about USD749.0mn. Operating cash flow was USD313.5mn in 2025, showing adequate cash generation from existing assets. Long-term contracts with PLN and the baseload nature of geothermal power also limit downside to revenue. From a short-term liquidity perspective, the cushion against the 2028 offshore bond is large.

However, this strength is not something that will necessarily be maintained without active management. PGE is a company pursuing growth investment, and projects such as Hululais, Lahendong 7&8, Sungai Penuh, and Bukit Daun require cash outflow before COD. Dividends are also large. In 2025, the company increased cash despite paying dividends of USD136.4mn, but when development capex increases, the priority among dividends, capex, refinancing, and parent funding will determine credit strength. If PGE is managed conservatively, cash flow from existing assets and low net debt can maintain investment-grade-like stability. Conversely, if growth investment and shareholder returns are both increased, standalone metrics may again reveal the constraints implied by Fitch’s SCP of bb .