Star Energy Geothermal issuer summary: One of Indonesia's largest geothermal portfolios and the credit profile of two secured green bond structures

Date prepared: 2026-05-16
Issuer display: Star Energy Geothermal / STENGE
Principal economic focus: Star Energy Geothermal (Wayang Windu) Limited 2033 secured notes; Star Energy Geothermal Salak, Ltd / Star Energy Geothermal Darajat II Limited 2029 and 2038 secured notes
Main source cut-off: BREN FY2025 audited annual report and March 2026 disclosure, Star Energy Green Bond Report 2025, SGX prospectus pages, Fitch/Moody's materials republished by Petromindo

1. Business Snapshot and Recent Developments

Star Energy Geothermal is the geothermal platform under Barito Renewables Energy Tbk (BREN), operating primarily at Salak, Darajat, and Wayang Windu in West Java, Indonesia. The first point bond investors should fix is that the STENGE name does not refer to debt of a single listed company. In practice, the credit needs to be read as two separate project-bond scopes: Star Energy Geothermal (Wayang Windu) Limited (SEGWW) and Star Energy Geothermal Salak, Ltd / Star Energy Geothermal Darajat II Limited (SEGSD).

BREN consolidated is important as the parent-company and business backdrop. In BREN's 2025 annual report, FY2025 consolidated revenue was US$605.2mn, net profit was US$165.1mn, total assets were US$3.87bn, and total liabilities were US$2.98bn. In the company's March 2026 disclosure, 3M2026 consolidated revenue was US$165mn, EBITDA was US$145mn, net profit was US$53mn, total liabilities were US$3.01bn, total debt was US$2.09bn, and D/E was 2.23x. These figures are useful in understanding Star Energy as a core business within a large renewable energy platform, as well as the parent company's capital-market access and operating capabilities.

However, BREN's consolidated financials should not be treated as the direct source of repayment for the SEGWW notes or the SEGSD notes. The source of repayment for the SEGWW notes is the cash flow of the Wayang Windu geothermal business, while the source of repayment for the SEGSD notes is the restricted-group cash flow from Salak and Darajat. BREN's EBITDA margin and consolidated revenue provide supplementary indications of the group's operating quality and financial flexibility, but the central points bondholders should focus on are the relevant assets' long-term contracts, power sales to PLN, JOC/ESC arrangements with PGE, DSRA/MMRA, distribution restrictions, DSCR, and current outstanding balances.

Operationally, Star Energy stated as of 2020 that it operated 875MW of aggregate geothermal capacity, comprising Wayang Windu at 227MW, Salak at 337MW, and Darajat at 271MW. BREN's FY2025 disclosure shows total gross installed geothermal power-plant capacity of 910MW at end-2025, increasing to 926MW in March 2026 following completion of the Wayang Windu retrofit. BREN has indicated a plan to raise geothermal capacity to above 1,000MW by end-2026 through Salak Unit 7, Wayang Windu Unit 3, Darajat Unit 3 retrofit, and other projects.

This capacity expansion consists of retrofits and adjacent development around existing geothermal assets, and is therefore more visible than entry into a new country or a new technology from scratch. On the other hand, in geothermal, subsurface resources, make-up wells, drilling, turbine upgrades, COD delays, and cost overruns have a direct impact on DSCR and distribution restrictions. The expansion should therefore not be viewed simply as a growth positive; it needs to be assessed by issuer.

Recent developments show a stable business and progress in expansion investment. For FY2025, BREN reported higher revenue and profit, supported by stable geothermal generation, the Salak Binary Unit, the Salak retrofit, and lower interest expense. In March 2026, the Wayang Windu retrofit was completed, and the 3M2026 EBITDA margin was 87.6%. Investors, however, should not translate this "group-level strength" directly into protection for each individual bond, and should instead assess separately the rating differential, DSCR differential, and collateral differential between SEGSD and SEGWW.

2. Entity Boundary and Bond Scope

The most important issue in this credit is which legal entity has the debt, which assets generate the repayment cash flow, and which numerical figures from which source should be used for which scope. The Star Energy Geothermal name is convenient for investors, but even under the same group, SEGSD and SEGWW are not the same credit. SEGSD is the restricted group that combines the two large geothermal fields of Salak and Darajat, and is at the lower end of investment grade at BBB- / Stable in the Fitch-republished material. By contrast, SEGWW is the 2033 note issuer whose primary repayment source is the single Wayang Windu site; it was upgraded to BB / Stable by Fitch in September 2025 in the republished material, and is Ba3 / Positive in the Moody's-republished material.

Structural protections also differ by issuer. Within the scope confirmed, SEGSD has thicker DSCR and reserve protection, while SEGWW is a single-site credit but has meaningful room for improvement from expansion investment.

STENGE can be described in shorthand as an "Indonesia geothermal credit", but investment analysis requires separating SEGSD and SEGWW. SEGSD has two sites, multiple units, thick DSCR, and tight distribution restrictions. SEGWW is a single-site credit positioned to improve through successful expansion investment.

This boundary management is also relevant to government support and offtaker assessment. PLN is the state-owned power utility, and PGE is Pertamina Geothermal Energy, so the policy importance of the contractual counterparties is high. However, Star Energy's bonds are not expressly guaranteed by the Indonesian government or PLN. Long-term contracts with PLN increase revenue visibility, but bondholders' direct claims depend on the individual bond documents, guarantors, collateral, accounts, distribution restrictions, and acceleration provisions.

3. Industry Position and Franchise Strength

Star Energy's business foundation lies in geothermal power, which has a high baseload character within renewable energy. Unlike solar and wind, geothermal has relatively limited short-term weather-driven variability and can operate at high utilisation if the resource, wells, and equipment remain healthy. Indonesia has abundant geothermal resources, and geothermal power is meaningful both for decarbonisation and power-supply stability.

The competitive strength is not only the generation capacity, but also the combination of Salak, Darajat, and Wayang Windu, all of which have long operating histories. Star Energy's 2020 release described the company as Indonesia's largest geothermal power producer and one of the world's leading geothermal companies. The 2025 Green Bond Reports show installed capacity of 381MW at Salak, 274.5MW at Darajat, and 230.5MW at Wayang Windu.

The strength of the geothermal franchise is also reflected in the low level of power-market risk. Salak, Darajat, and Wayang Windu all operate through JOCs with PGE and ESCs for power sales to PLN. For SEGSD, the Fitch republication states that the full capacity of both plants is contracted to PLN under long-term ESCs whose terms exceed the debt tenor, eliminating merchant price risk. A take-or-pay-style contract structure under which PLN pays for 80% to 95% of rated capacity is said to reduce curtailment risk and revenue volatility. Tariffs are described as fixed under a transparent published formula, with indexation to Indonesian CPI, US CPI, PPI, and the US dollar-rupiah exchange rate.

For Wayang Windu, the Moody's republication states that uncertainty over Unit 1's production period and tariff had previously been a constraint, but cash-flow visibility improved through a legal interpretation and a tripartite agreement. Specifically, the production period for Unit 1 is said to have been automatically extended to 2039 in line with the contract term with PGE and PLN, and the Unit 1 tariff from June 2022 to the end of the production period was confirmed at a certain level. This is important in assessing the remaining term of the 2033 notes.

At the same time, the strength of the franchise should not be confused with a sovereign guarantee. PLN is a state-owned power company and PGE is part of the Pertamina group, so the public-sector nature of the counterparties is high. However, Star Energy itself is not a government-owned quasi-sovereign issuer, but a private corporate group under Barito Renewables / Barito Pacific. The policy importance of the geothermal assets supports operational continuity, permits, contractual stability, and rating-agency offtaker assessment, but it does not imply a direct government guarantee of principal and interest on the bonds.

Geothermal-specific constraints are also material. Because geothermal does not require purchased fuel, its sensitivity to fuel prices is lower than that of coal- or LNG-fired power. However, it is exposed to subsurface resources, steam supply, well decline, make-up drilling, reinjection wells, geological risk, equipment failure, major maintenance, and environmental regulation. The Fitch republication states that, for SEGSD, an independently verified 20-year capital plan provides visibility on well workovers and make-up drilling, while long-term resource risk remains. This is the essence of geothermal credit. Even if power prices are controlled through contracts, cash flow will be impaired if the resource, wells, or equipment underperform.

4. Asset and Segment Assessment

For Star Energy, it is not sufficient to assess the three fields as a single pool. Salak and Darajat are included in the SEGSD restricted group, while Wayang Windu is the principal repayment source for the SEGWW notes. All three are geothermal assets and have relationships with PLN/PGE, but the number of sites, units, wells, expansion investments, DSCR, and bond structures differ.

Salak is the largest asset by scale and generation volume. The 2025 Green Bond Report states that Salak is located in Sukabumi and manages Indonesia's largest geothermal field. Gross generation in 2024 was 3.18TWh, the largest among Star Energy's disclosed geothermal assets. Salak Binary is described as a technology that generates power from previously unused brine, and reached COD in February 2025. In addition, Salak Unit 7 is stated to have 40MW of capacity, investment cost of US$133mn, and scheduled COD in December 2026. These projects may increase cash flow by further utilising an existing field, but in relation to SEGSD's debt structure, it is necessary to verify how the additional investment affects DSCR and distributable cash.

Darajat is a large geothermal asset with 274.5MW of capacity, and the Fitch republication refers to the cost advantage of its dry steam reservoir as one factor supporting SEGSD's assessment. Its 2024 CO2 emissions of 31.43g/kWh are low, making it a clear asset from an environmental-metrics perspective in the Green Bond Report. Darajat Unit 3 retrofit is included in BREN's post-2026 plan as a 7MW capacity addition. Darajat has lower gross generation than Salak, but it improves the diversification benefit of the two-site restricted group.

Wayang Windu is the centre of the SEGWW notes and is the asset that requires the closest analytical attention. The 2018 Green Bond Framework described Wayang Windu as a geothermal power plant near Pangalengan with 227MW of gross installed capacity, with Unit 1 starting commercial operation in 2000 and Unit 2 in 2009. In the 2025 Green Bond Report, capacity was 230.5MW and 2024 net generation was 1.89TWh. The Moody's republication states that Wayang Windu's five-year average net capacity factor was 96.1% and Unit 1/2 availability was above 99%, indicating a strong operating record.

However, Wayang Windu is a single-site credit. Whereas SEGSD is diversified across the two large fields of Salak and Darajat, SEGWW depends heavily on the resource and equipment at Wayang Windu. The Fitch republication also explains that the rating differential between SEGWW and SEGSD reflects, among other things, SEGWW's two units, single site, and lower DSCR. The Unit 1/2 retrofit and new Unit 3 may mitigate Wayang Windu's weaknesses, but investors should not pull forward improvement without reviewing construction delays, resource confirmation, and the terms of additional debt.

The expansion projects are as follows.

The important point in this table is that growth investment is not held in a uniform bucket. Investment on the Salak and Darajat side affects SEGSD's investment-grade profile, while investment on the Wayang Windu side affects SEGWW's rating upside and construction risk. The headline of exceeding 1GW is easy to understand as a business strategy, but bondholders need to separate which project belongs to which debt scope, and whether the funding is handled through the parent, subsidiaries, additional bank debt, subordinated shareholder loans, or internal cash.

5. Financial Profile and Analysis

Financial analysis should distinguish three layers: BREN consolidated, SEGSD, and SEGWW. BREN consolidated shows that Star Energy is a large profit contributor and that the parent company has some capital-market access. For SEGSD and SEGWW, however, public issuer-specific financial statements have not been sufficiently obtained. The analysis therefore uses the bond balances in the Green Bond Report, DSCR figures from republished rating-agency materials, and BREN's disclosures on capacity expansion and bank borrowings, while explicitly noting information constraints.

At BREN consolidated level, the FY2025 geothermal business was stable. The company cited the Salak retrofit, Salak Binary Unit, and lower interest expense as drivers of profit improvement. For March 2026 as well, completion of the Wayang Windu retrofit and a high EBITDA margin provide background evidence of the geothermal business's operating quality.

However, it is risky to assess SEGSD or SEGWW's credit quality solely from BREN consolidated D/E or EBITDA. The SEGSD and SEGWW notes depend on each issuer's contracted cash flow, amortisation schedule, reserves, distribution restrictions, and DSCR. Even if BREN is profitable on a consolidated basis, the important point is which accounts capture the bond cash flow and in what order it is allocated to debt service. Conversely, high debt at BREN consolidated level does not immediately mean that the SEGSD/SEGWW restricted-group cash flow is impaired.

SEGSD's financial profile appears relatively strong based on public rating materials. The Fitch republication shows a 2026-2038 base-case annual average DSCR of 2.65x and a minimum of 1.86x, and a rating-case average of 2.42x and minimum of 1.66x. The 2025 Green Bond Report shows an SEGSD green bond balance of US$976.995mn as of end-June 2025. This indicates that amortisation has progressed from the original principal amount of US$1.11bn, but the actual balance as of 2026-05-16 remains unconfirmed.

SEGSD appears strong because it has two large assets, multiple units, strong DSCR, fully amortising debt, DSRA/MMRA, and distribution restrictions. The Fitch republication states that SEGSD has advantages over Wayang Windu in scale, operating history, capex per unit of capacity, reserve requirements, and distribution restrictions. This is the core basis for treating SEGSD as more clearly positioned at the lower end of investment grade within the same Star Energy group.

SEGWW's financial profile has improvement drivers, but more constraints than SEGSD. The 2025 Green Bond Report shows a Wayang Windu green bond balance of US$397.010mn as of end-June 2025. The Moody's republication projects an average DSCR of 1.30x in its base case from 2025 to bond maturity, while the Fitch republication shows a post-expansion rating-case DSCR of 1.41x. These indicate debt-service headroom, but they are materially different from SEGSD's DSCR of more than 2.0x.

The improvement drivers for Wayang Windu are the Unit 1/2 retrofit and Unit 3. The Moody's republication states that an upgrade could result if expansion investments proceed as planned, shareholder-side funding remains subordinated, and average DSCR exceeds 1.30x. The Fitch republication also views positively the funding structure for the expansion investment, under which cash flow increases without a large increase in debt service for existing debt. On the other hand, DSCR is thin, and the credit is sensitive to construction delays, resource underperformance, deterioration in additional-debt terms, and reduced transparency around PPA/ESC terms.

In April 2025, SEGPL and SEGWWL entered into a senior secured term loan agreement with DBS Bank and SMBC Singapore Branch. BREN's March 2026 financial notes state that Facility A was US$114.5mn and Facility B was US$25.0mn, totalling US$139.5mn, of which US$72.987mn had been drawn by end-March 2026. The use of proceeds is the ongoing Wayang Windu capacity expansion. This shows that the expansion investment is progressing with actual financing. The impact on existing bonds should be assessed by checking subordination, collateral, DSCR, and future refinancing terms.

Overall, based on public information, SEGSD has DSCR headroom consistent with low investment grade. SEGWW has a strong operating record and improvement investment, but retains a crossover/BB character because of single-site exposure and thinner DSCR. BREN consolidated provides a favourable business backdrop, but is not the repayment source for the individual notes. Maintaining this three-layer distinction is the core of the financial analysis.

6. Structural Considerations for Bondholders

For bond investors, the structural issues are issuer, guarantee, collateral, accounts, reserves, distribution restrictions, and amortisation. Star Energy bonds should be read not as ordinary unsecured corporate bonds, but as project-finance-style secured notes that capture contracted cash flow from geothermal assets.

The SEGWW 2033 notes are, under the 2018 SGX-listed Offering Memorandum, US$580mn 6.75% senior secured notes issued by Star Energy Geothermal (Wayang Windu) Limited and due 24 April 2033. Interest is paid semi-annually, and principal amortises according to a repayment schedule. The cover page of the Offering Memorandum states that the notes are direct, unconditional, senior secured obligations of the issuer, secured by the collateral described in the security documents. It also states that, upon a change-of-control trigger, the issuer must repurchase the notes at 101%.

The SEGSD 2029/2038 notes are US$1.11bn senior secured green bonds jointly issued in 2020 by Star Energy Geothermal Salak, Ltd and Star Energy Geothermal Darajat II Limited. The 2029 notes are US$320mn, with a 3.25% coupon and April 2029 maturity; the 2038 notes are US$790mn, with a 4.85% coupon and October 2038 maturity. The SGX prospectus page lists these two notes, and Star Energy's 2020 release states that the proceeds were used for repayment of existing borrowings, related costs, DSRA/MMRA, and general purposes related to the operation of Salak and Darajat.

SEGSD's structure, as far as can be confirmed from the Fitch republication, has two senior secured tranches ranking pari passu and designed to fully amortise sequentially. The maturity of the long tranche is said to fall two years before the earliest ESC expiry. The Fitch republication cites as protections a 12-month DSRA, MMRA, and distribution restrictions based on a 1.15x trailing 12-month DSCR test. On the other hand, it explains that under Indonesian regulation, project contracts such as ESCs and JOCs, as well as power-generation assets, are excluded from the collateral package. This point is important. Even though the notes are secured, bondholders do not fully control the power plants themselves or the main contracts.

SEGWW's structure is secured, but may have weaker protections than SEGSD. The Fitch republication states that SEGSD has thicker MMRA requirements and tighter distribution restrictions. At the same time, because power-generation assets are excluded from SEGSD's collateral, the collateral package itself may have some weaker aspects relative to Wayang Windu. In other words, one structure is not always superior to the other: SEGSD is stronger in DSCR, scale, diversification, and reserves, while SEGWW may have some relative strengths in collateral scope. Before investing, investors need to review the collateral, guarantee, debt limitation, distribution restriction, cross-default, change-of-control, and amendment provisions in each Offering Memorandum.

The main structural support, to the extent confirmed, is the cash-flow waterfall and reserves. The structure is understood as one in which geothermal power-sale revenue is directed through account control to debt service, DSRA, MMRA, and distribution restrictions, thereby prioritising debt service over shareholder distributions. However, direct extraction of the Salak-Darajat OM text was insufficient, so the exact account order, payment priority, exceptions, and waiver authority remain points for future verification. The conclusion is that structural protection is stronger than for an ordinary holding-company bond, but its strength should not be overstated without confirming the details of the provisions.

Structural protection is not a complete ring-fence. First, legal enforcement of collateral, consent from regulators/PGE/PLN, assignment of contracts, and collateral enforcement under Indonesian law remain uncertain. Second, when additional debt or expansion funding enters the group, its subordination, collateral ranking, and impact on distribution restrictions must be confirmed. Third, the contracts with PLN and PGE are the source of cash flow, and contract amendments, tariff interpretations, term extensions, and payment delays directly affect debt service. Fourth, disclosure is limited, and without the latest compliance certificates or trustee reports, it is difficult to recalculate actual DSRA/MMRA balances or whether distribution restrictions have been triggered.

Accordingly, the structural assessment should not be "secured, therefore safe". It should be framed as follows: the structure is strong because it channels long-term contracted cash flow to debt service through reserves and distribution restrictions, but the main contracts, power-generation assets, Indonesian law, and latest balances require verification.

7. Capital Structure, Liquidity and Funding

In assessing capital structure, the SEGSD 2029/2038 notes, the SEGWW 2033 notes, BREN consolidated debt, and bank loans for expansion investment should be separated. Under the Green Bond Report 2025, the SEGSD balance at end-June 2025 was US$976.995mn and the SEGWW balance at end-June 2025 was US$397.010mn. These balances have declined from the original issue amounts, but the DTC/clearing balances, actual balances of each tranche, WAL, and market prices as of 2026-05-16 remain unconfirmed.

SEGSD's fully amortising structure reduces long-term refinancing risk. The Fitch republication also positively notes SEGSD's fully amortising debt and lack of refinancing risk. The two 2029 and 2038 notes are designed to amortise sequentially, and if debt service is scheduled against contracted cash flow, dependence on bullet refinancing is lower than for bullet bonds. Still, without the current balance and amortisation schedule, the effective duration and remaining risk of the 2038 notes cannot be evaluated precisely.

SEGWW's 2033 note balance has declined, while bank loans for expansion investment have been added. The Moody's republication states that funding from SEGPL to SEGWW is expected to be provided through subordinated shareholder loans or through the settlement of existing intercompany loans, and is not expected to immediately affect debt service on the existing notes. The Fitch republication also positively assesses the assumption that 64% of expansion capex will be funded by equity or shareholder loans subordinated to the existing notes, 20% by internal cash, and 16% by new debt. If this assumption breaks down, expectations for an upgrade of SEGWW would weaken.

BREN consolidated liquidity should be viewed against total assets of US$3.94bn, total liabilities of US$3.01bn, total debt of US$2.09bn, and net debt of US$1.66bn as of 3M2026. The 3M2026 release states that D/E on a total debt/equity basis improved from 2.36x at end-2025 to 2.23x at end-March 2026. By contrast, the debt-to-capital-type metric in the annual report is shown at 3.38x for FY2025, indicating a different definition. At consolidated level, the issuer generates high EBITDA from geothermal and wind power while continuing capacity expansion investment. However, improvement in consolidated leverage does not automatically show that SEGSD/SEGWW DSRAs are funded or that individual bond covenants are being complied with.

Several important liquidity items remain unconfirmed. First, the balances, prices, yields, and WALs of each bond as of 2026-05-16. Second, the required and actual balances of the DSRA and MMRA. Third, the presence or absence of distribution tests, cash traps, waivers, and amendments. Fourth, the collateral ranking, interest rate, maturity, and DSCR treatment of additional debt related to expansion investment. These cannot be sufficiently recalculated from public Green Bond Reports and republished rating materials alone.

The current capital-structure assessment is as follows: SEGSD has low refinancing risk because of long-term contracts and a fully amortising structure; SEGWW can improve if expansion investment translates into higher cash flow, but the terms of additional funding need to be tracked; and BREN consolidated shows stable parent-company earnings but does not directly protect the individual notes.

8. Rating Agency View

Rating-agency views are useful in distinguishing SEGSD from SEGWW. However, the Fitch and Moody's information confirmed in this review is mainly from Petromindo republications, not direct access to the full official reports. Therefore, the rating levels, DSCRs, and sensitivities are used as important supplementary information, while source limitations remain in Sources and unconfirmed items.

For SEGSD, the Fitch republication states that on 30 September 2025 Fitch affirmed the notes of the Star Energy Geothermal Salak-Darajat restricted group at BBB- / Stable. The rating is supported by long-term ESCs, a take-or-pay structure with PLN, a transparent tariff formula, CPI and FX indexation, scale and diversification across two sites and multiple units, fully amortising debt, DSRA, MMRA, and distribution restrictions. Fitch shows an average 2026-2038 DSCR of 2.65x and a minimum of 1.86x in the base case, and an average of 2.42x and a minimum of 1.66x in the rating case.

SEGSD's BBB- indicates the most defensive bond scope under the Star Energy umbrella. In the Fitch republication, SEGSD is said to be stronger than Wayang Windu in scale, operating history, capex per unit of capacity, reserve requirements, and DSCR. In comparison with Sorik Marapi Geothermal Power, which Fitch cites as a peer, SEGSD is supported by its long operating history, scale, predictable production, and fully amortising structure. The exclusion of power-generation assets and main contracts from the collateral package remains a constraint.

For SEGWW, the Fitch republication states that on 30 September 2025 Fitch upgraded the 2033 secured notes to BB and assigned a Stable Outlook. The reason was the view that the new 30MW Unit 3 and the 18.4MW Unit 1/2 retrofit would strengthen cash flow and scale, improving rating-case DSCR from 1.34x before expansion to 1.41x.

The Moody's republication states that on 23 July 2025 Moody's affirmed SEGWW's 2033 US dollar notes at Ba3 and changed the outlook to Positive. The positive drivers were operating record, Unit 1/2 retrofit, Unit 3, adequate resources at the Wayang Windu field, and improved visibility over Unit 1's term and tariff. Average DSCR from 2025 to bond maturity is stated at 1.30x.

This rating differential is central to the credit analysis. SEGSD is low investment grade, supported by the scale of two sites and strong structural protection. SEGWW is BB/Ba3, with a good operating record but constrained by single-site exposure and thinner DSCR, while successful expansion provides room for improvement. Star Energy as a whole should not be labelled simply as "BBB-" or "BB"; investors first need to confirm whether the position or prospective investment is in the 2029/2038 notes or the 2033 notes.

9. Credit Positioning

Star Energy's credit positioning lies at the intersection of Indonesian IPPs selling to PLN, renewable energy, and project-finance-style bonds. It should not be assessed like an ordinary corporate bond based only on consolidated EBITDA and total debt. The focus should instead be PPA/ESCs, offtaker, geothermal resource, DSCR, reserves, and the amortising structure.

As an Indonesian power-sector project bond, it is relatively easy to compare with PLN-linked PPA bonds such as the Minejesa Capital / Paiton Energy structure. Because Star Energy is geothermal, coal fuel procurement and transition risk are lower, while geothermal resource, wells, make-up drilling, steam supply, and geological risk are central.

PGE and PLN have strong government-related and state-owned characteristics, but Star Energy is under the private Barito group. Policy importance and the public nature of the offtaker are supportive, but quasi-sovereign support such as government ownership, an explicit guarantee, or sovereign-linked ratings should generally not be expected.

Compared with other renewable project bonds, there are common elements with solar restricted groups backed by long-term PPAs. However, while solar is mainly about irradiation, offtaker, and hedging, geothermal is mainly about subsurface resources, wells, PGE/JOC, and steam supply.

This report does not make a definitive relative-value call. Bloomberg, Refinitiv, dealer runs, current prices, yield to worst, Z-spread, G-spread, WAL, 144A/Reg S liquidity, and comparison with similar-tenor PLN/PGE/Pertamina/Minejesa/other renewable project bonds have not been confirmed. From a credit perspective alone, SEGSD is a candidate for review as a low-investment-grade project bond where PLN/PGE contracts and DSCR are key. SEGWW is a candidate for review as an improving BB/Ba3 project bond, where successful expansion and DSCR improvement must be assessed, and a higher risk premium than SEGSD is required.

Investment decisions should separate two questions, even within the same Star Energy group. For SEGSD, investors should ask whether the spread is sufficient for a lower-end investment-grade credit exposed to DSCR, PLN/PGE, Indonesian regulation, long-term geothermal resources, and residual risk through 2038. For SEGWW, investors should ask whether the spread adequately compensates for a BB/Ba3 crossover-type credit exposed to expansion completion, DSCR in the 1.30-1.40x range, single-site risk, and the subordination of bank loans/shareholder loans.

10. Key Credit Strengths and Constraints

The first strength is the quality of the underlying assets as geothermal baseload power. Star Energy's assets are large geothermal fields with long operating histories: Salak, Darajat, and Wayang Windu. They are not dependent on purchased fuel. Compared with solar and wind, geothermal can more readily maintain high utilisation, and when combined with long-term contracts to PLN, it provides high revenue visibility. BREN's high EBITDA margins in FY2025 and 3M2026 are background evidence of this business characteristic, but they are not the direct repayment source for the individual notes.

The second strength is long-term offtake and contract structure. The Fitch republication states that, for SEGSD, all capacity is contracted to PLN under long-term ESCs, and that take-or-pay-style payments, a transparent tariff formula, and inflation/FX indexation support revenue visibility. SEGWW is also supported by the JOC with PGE, ESC to PLN, and improved visibility over Unit 1's term and tariff. This is substantially different from generation businesses exposed to short-term power prices or spot demand.

The third strength is project-finance-style structural protection. Both SEGSD and SEGWW are secured notes, with DSRA, MMRA, cash-flow waterfalls, distribution restrictions, and full or staged amortisation. For SEGSD in particular, the Fitch republication positively assesses a 12-month DSRA, MMRA, and a 1.15x DSCR distribution restriction.

The fourth strength is room for cash-flow improvement from capacity expansion. Salak Binary, Salak retrofit, Wayang Windu retrofit, Salak Unit 7, and Wayang Windu Unit 3 are investments that deepen utilisation of existing geothermal fields. For Wayang Windu in particular, capacity additions and improved contractual visibility may offset the constraints of single-site exposure and thinner DSCR. This is also the background to Fitch's and Moody's positive rating actions on Wayang Windu.

The main constraint is concentration on PLN/PGE. Long-term contracts are a strength, but concentration of power sales and contractual counterparties in PLN/PGE means reliance on the Indonesian power sector, state-owned enterprises, tariff policy, payment record, and contract amendment risk. PLN and PGE are policy-important, but they do not provide an explicit guarantee for the Star Energy bonds.

The second constraint is geothermal resource risk. Subsurface resources are not completely fixed, even with technical studies and a long operating history. Steam supply, well decline, make-up drilling, reinjection, equipment maintenance, seismic/geological issues, and environmental regulation require long-term monitoring. Fitch's retention of long-term resource risk for SEGSD is a basic constraint of geothermal credit.

The third constraint is the DSCR differential between issuers. SEGSD has DSCR headroom consistent with the lower end of investment grade, while SEGWW's DSCR is in the 1.30-1.40x range, giving thinner downside absorption. For SEGWW, it is important that expansion investment is completed as planned, shareholder funding remains subordinated, and additional debt does not become excessive.

The fourth constraint is the limitation of collateral and legal protection. Even for secured notes, Indonesian regulation may exclude main contracts and power-generation assets from the collateral package. Enforceability of collateral, consent to contract transfer, local law, and involvement by PGE/PLN/regulators all create significant uncertainty under stress.

The fifth constraint is disclosure. BREN consolidated materials and Green Bond Reports are useful, but current issuer-specific audited financials, compliance certificates, DSCR details, DSRA/MMRA balances, current balances, waiver history, and prices/spreads are not sufficiently confirmed. For project bonds with limited disclosure, it is important not to fill information gaps by assumption.

11. Downside Scenarios and Monitoring Triggers

The most important downside scenario is a problem in contracted cash flow with PLN/PGE. Payment delays by PLN, disputes over tariff interpretation, changes to ESC/JOC terms or tariffs, operational disagreement with PGE, or changes in tariffs and power policy by the government/regulator would affect power-sale revenue and DSCR. For Wayang Windu in particular, improved visibility over Unit 1's term and tariff is a positive rating driver, so if that premise breaks down, the credit view weakens.

The second downside scenario is underperformance of the geothermal resource or equipment. Lower well productivity, failed make-up drilling, reinjection problems, equipment failure, turbine-upgrade delays, or higher major-maintenance costs would flow through generation volume, operating costs, capex, MMRA, and DSCR. SEGSD is supported by two-site diversification and a 20-year capital plan, but long-term resource risk does not disappear. SEGWW is a single-site credit, so the same resource or equipment shock would tend to have a larger impact.

The third downside scenario is delay or cost overrun in expansion investment. If Salak Unit 7, Wayang Windu Unit 3, Darajat retrofit, or other projects are not completed as scheduled, the expected cash-flow increase would be delayed while additional debt or shareholder-funding burden would arise first. For SEGWW in particular, COD delays, higher EPC costs, insufficient resource confirmation, and deterioration in additional-debt terms would weaken upgrade expectations.

The fourth downside scenario is deterioration in DSCR, DSRA, MMRA, and distribution restrictions. If rating-agency DSCR falls below thresholds, the DSRA is drawn, the MMRA becomes deficient, distribution restrictions are breached, or waivers/amendments become necessary, the structural comfort of the project bonds would weaken. For SEGSD, the Fitch downside trigger is a rating-case average DSCR below 1.55x. For SEGWW, because DSCR is already thin, whether DSCR falls below around 1.30x is important.

The fifth downside scenario is deterioration in the funding environment. Higher US dollar rates, wider Indonesia risk, market concerns over Barito/BREN group, and weaker demand for renewable project bonds would affect additional debt, hedging, refinancing, and liquidity. SEGSD has limited refinancing dependence because it is fully amortising, but market price and liquidity can still move for the long 2038 notes.

The sixth downside scenario is group and sponsor risk. Star Energy is under BREN/Barito Pacific Group, and the parent's capital policy, additional investment, shareholder funding, change of control, and group-level credit headlines can affect market perception. The project-bond structure provides some ring-fencing, but it does not fully isolate the credit from sponsor credit, market access, or rating-agency governance assessment.

Monitoring items are: 1) contract and payment status with PLN/PGE, 2) generation volume, availability, and well plans by field, 3) progress on Salak Unit 7 / Wayang Windu Unit 3 / retrofits, 4) DSCR, DSRA, MMRA, and distribution restrictions, 5) SGX notices, amendments, and waivers, 6) rating actions by Fitch/Moody's/S&P, 7) BREN consolidated total debt, D/E, and funding, and 8) bond balances, prices, and spreads.

12. Credit View and Monitoring Focus

The current credit view on Star Energy Geothermal should not be expressed as a single level. It is more appropriate to assess SEGSD as a broadly stable, low-investment-grade project bond, and SEGWW as a BB/Ba3 project bond with an improving direction but dependence on expansion investment, subordinated funding, and DSCR improvement. SEGSD's direction is biased toward stability, given the BBB- / Stable in the Fitch republication, two-site diversification, and rating-case average DSCR of 2.42x. SEGWW's direction is improving, supported by the Unit 1/2 retrofit, Unit 3, and improved visibility over the Unit 1 contract, but DSCR is thin at 1.30-1.40x and sensitivity to construction, funding, and resource risk is high. The likelihood of rapid credit deterioration is not high under normal conditions, but if PLN/PGE payments, geothermal resources, expansion investment, DSCR/reserves, and covenant amendments all deteriorate at the same time, especially SEGWW would require relatively quick downward reassessment.

The main basis for this view is the scale of the geothermal assets and contracted cash flow. Star Energy is one of Indonesia's largest geothermal platforms, and Salak, Darajat, and Wayang Windu all have long operating histories. Long-term ESCs with PLN, JOCs with PGE, the baseload renewable nature of the assets, DSRA/MMRA, distribution restrictions, and fully amortising structures provide stronger credit protection than ordinary unsecured corporate bonds. SEGSD in particular appears to be the most defensive bond scope under Star Energy, supported by two-site diversification, multiple units, and rating-case average DSCR of 2.42x in the public rating material.

At the same time, Star Energy should not be treated like an Indonesian government-related issuer or PLN-guaranteed bond. The offtaker is policy-important and the contract structure is strong, but principal and interest on the bonds are not direct government obligations. Even secured notes may exclude main contracts and generation assets from collateral, and recovery under stress depends materially on the continuity of contracted cash flow. Therefore, in assessing default probability, structural protections and contracts should be emphasised; in assessing recovery, covenants, and pricing, collateral limitations and information constraints should be treated conservatively.

SEGSD can be positioned, from a credit perspective, as a selectively investable low-investment-grade project bond. The 2029 notes and 2038 notes have different risk tenors, and the 2038 notes in particular remain exposed for a long period to PLN/PGE, geothermal resources, Indonesian policy, and BREN/Barito-related headlines. Even within SEGSD, therefore, an adequate tenor premium is required. Because live spreads have not been confirmed, this report does not judge whether the bonds are cheap or rich.

For SEGWW, the improvement drivers are clear, but a higher risk premium than SEGSD is required. Wayang Windu's operating record, Unit 1/2 retrofit, Unit 3, and improved visibility over the Unit 1 contract are positive. However, single-site exposure, DSCR in the 1.30-1.40x range, expansion investment, and the need to confirm subordination of additional funding remain constraints. The SEGWW 2033 notes can be a credit candidate for investors willing to underwrite successful expansion, but the buffer against project delay or DSCR deterioration is smaller than for SEGSD, and final investment decisions require confirmation of market price and spread.

The highest-priority items for further verification are the latest issuer-specific compliance certificates, DSCR calculations, DSRA/MMRA balances, bond balances as of May 2026, construction progress on Salak Unit 7 and Wayang Windu Unit 3, subordination of bank loans/shareholder loans, PLN/PGE payment status, and market prices/spreads. Once these are confirmed, it should be possible to judge more precisely what spread differential is appropriate between SEGSD and SEGWW within the same Star Energy group.

13. Short Summary & Conclusion

Star Energy Geothermal is one of Indonesia's largest geothermal power platforms, operating Salak, Darajat, and Wayang Windu under BREN. Credit analysis should not treat STENGE as a single issuer; it should separately assess the lower-investment-grade Salak-Darajat restricted group and the improving but thinner-DSCR Wayang Windu 2033 notes. Long-term contracts to PLN, geothermal baseload characteristics, DSRA/MMRA, and distribution restrictions are supportive, but these are not government guarantees. The main points to watch are geothermal resource risk, expansion investment, contractual and collateral constraints, and the unconfirmed latest balances and market prices.

14. Sources

Primary company and listing sources

1. PT Barito Renewables Energy Tbk, Annual Report 2025, official PDF, accessed 2026-05-16.
   https://baritorenewables.co.id/en/annual-report

2. PT Barito Renewables Energy Tbk, "PT Barito Renewables Energy Tbk (IDX: BREN) Announces Its Audited Consolidated Performance for Full Year 2025", press release dated 2026-03-26.
   https://baritorenewables.co.id/en/press-release/pt-barito-renewables-energy-tbk-idx-bren-announces-its-audited-consolidated-performance-for-full-year-2025

3. PT Barito Renewables Energy Tbk, "3M-2026 Financial Performance Results", press release dated 2026-05-04.
   https://baritorenewables.co.id/en/press-release/3m-2026-financial-performance-results

4. PT Barito Renewables Energy Tbk, "Strengthening the Energy Transition, Barito Renewables Inaugurates Expansion and Capacity Addition of Five Star Energy Geothermal Projects", press release dated 2025-07-04.
   https://www.baritorenewables.co.id/uploads/2025/07/1ff568aab154fa62fba693821b13e951_cf4a271c24107f90dccc508079f03d8c.pdf

5. Star Energy Geothermal, "Star Energy Geothermal Group Raises US$1.11 Billion from new Green Bonds...", press release dated 2020-10-14.
   https://www.starenergygeothermal.co.id/2020/10/14/star-energy-geothermal-group-raises-us-1-11-billion-from-new-green-bonds/

6. Star Energy Geothermal, Salak-Darajat Annual Green Bond Report 2025, September 2025.
   https://www.starenergygeothermal.co.id/wp-content/uploads/2025/09/Salak-Darajat-Annual-Green-Bond-Report-2025.pdf

7. Star Energy Geothermal, Wayang Windu Annual Green Bond Report 2025, September 2025.
   https://www.starenergygeothermal.co.id/wp-content/uploads/2025/09/Wayang-Windu-Annual-Green-Bond-Report-2025.pdf

8. Star Energy Geothermal Salak, Ltd and Star Energy Geothermal Darajat II Limited, Green Bond Framework, September 2020.
   https://www.starenergygeothermal.co.id/wp-content/uploads/2020/09/Salak-Darajat%20Green%20Bond%20Framework%202020.pdf

9. Star Energy Geothermal (Wayang Windu) Limited, Green Bond Framework, February 2018.
   https://www.starenergygeothermal.co.id/wp-content/uploads/2020/09/WW-Green-Bond-Framework.pdf

10. SGX, Listing Prospectus page for Star Energy Geothermal Salak, Ltd / Star Energy Geothermal Darajat II Limited, Prospectus dated 2020-10-06.
    https://links.sgx.com/1.0.0/prospectus-circulars/41357

11. SGX, Listing Prospectus page for Star Energy Geothermal (Wayang Windu) Limited, Prospectus dated 2018-04-17.
    https://links.sgx.com/1.0.0/prospectus-circulars/31751

12. SGX / Star Energy Geothermal (Wayang Windu) Limited, Final Offering Memorandum, 2018-04-17.
    https://links.sgx.com/FileOpen/Van%20Gogh%20-%20Final%20Offering%20Memorandum.ashx?App=Prospectus&FileID=34873

Rating-related sources

13. Petromindo republication of Fitch Ratings, "Fitch Affirms Star Energy Geothermal (Salak-Darajat) RG's Notes at 'BBB-'; Outlook Stable", 2025-09-30.
    https://www.petromindo.com/news/article/fitch-affirms-star-energy-geothermal-salak-darajat-rg-s-notes-at-bbb-outlook-stable-4

14. Petromindo republication of Fitch Ratings, "Fitch Upgrades Star Energy Geothermal Wayang Windu's Notes to 'BB'; Outlook Stable", 2025-09-30.
    https://www.petromindo.com/news/article/fitch-upgrades-star-energy-geothermal-wayang-windu-s-notes-to-bb-outlook-stable

15. Petromindo republication of Moody's Ratings, "Moody's Ratings affirms Star Energy Geothermal (Wayang Windu) Limited's Ba3 rating; changes outlook to positive", 2025-07-23.
    https://www.petromindo.com/news/article/moody-s-ratings-affirms-star-energy-geothermal-wayang-windu-limited-s-ba3-rating-changes-outlook-to-positive

Supplementary sources

16. Barito Renewables, "Barito Renewables to Increase Geothermal Asset Capacity by 53 MW with Salak Binary and Retrofit Projects", press release dated 2024-06-05.
    https://baritorenewables.co.id/en/press-release/barito-renewables-to-increase-geothermal-asset-capacity-by-53-mw-with-salak-binary-and-retrofit-projects

17. ThinkGeoEnergy, "Star Energy completes capacity expansion of Wayang Windu geothermal power plant in Indonesia", 2026-03-03. Used only as a supplementary public report consistent with BREN's official 3M2026 statement that the retrofit was completed.
    https://www.thinkgeoenergy.com/star-energy-completes-capacity-expansion-of-wayang-windu-geothermal-power-plant-in-indonesia/

Local structured extract

• issuer_summary/issuers/star_energy_geothermal/data/star_energy_geothermal_source_extract_20260516.json

Unverified / Pending

• Latest compliance certificates, audited issuer-specific financials, and DSCR calculation details for SEGWW and the SEGSD restricted group.
• Latest balances and test results for DSRA, MMRA, major maintenance reserve, distribution lock-up, and cash trap.
• Current balance, clean price, yield, WAL, G-spread, Z-spread, and 144A/Reg S liquidity of the SEGWW 2033 notes, SEGSD 2029 notes, and SEGSD 2038 notes as of 2026-05-16.
• Direct extraction of the Salak-Darajat 2020 Offering Memorandum text. The SGX prospectus page was confirmed, but direct extraction of the body PDF was insufficient in this review.
• Official full Fitch and Moody's report texts. The rating information in this review is based on Petromindo republications.
• PLN/PGE contractual payment history, tariff formula by PPA/ESC, original text of the Unit 1 term and tariff agreement, and latest amendments to PGE/JOC/ESC arrangements.
• Latest construction progress, funding terms, and collateral ranking/subordination of additional debt for Wayang Windu Unit 3, Salak Unit 7, and Darajat Unit 3 retrofit.