International ratings agency Moody’s Investors Service predicts there will be no immediate impact on the ratings of coal miners Bumi Resources and Berau Coal Energy from news about debt-refinancing concerns at their parent company, Bakrie & Brothers. News that Bakrie & Brothers was negotiating with Credit Suisse and other lenders to restructure a $1.3 billion loan arranged by the investment bank on March 2, has made headlines around the world.

Concerns arose as Bakrie & Brothers put its 47 percent ownership in London-based Bumi Plc, previously known as Vallar and founded by investment banker Nathaniel Rothschild, as collateral for the syndicated loans.

A big slump in Bumi Plc’s share price prompted the deadline for repayment to be brought forward from March 2012, because the value of Bumi Plc was no longer enough to cover it. But in a report dated last Thursday, Moody’s said such news will have limited impact on the coal firms.

“In Bumi and Berau Coal Energy’s debt indentures, strong covenants and cash-distribution agreements that prioritize debt servicing and limit shareholder-friendly actions provide protection to bondholders and bank creditors,” Moody’s said in the report. Bakrie Group and the Rothschild banking dynasty agreed last year that Vallar would receive a 25 percent stake in Bumi Resources and a 75 percent stake in Berau Coal Energy.

Bumi Plc has increased its ownership in Indonesian Bumi Resources to 29 percent and ownership in Berau to 85 percent. But Moody’s said that “a material dilution of Bakrie & Brother’s interest in Bumi Plc is unlikely. The Bakrie family group has strong incentives to retain their stake in Bumi Plc, the group’s prized asset.

“During the global financial crisis of 2008 to 2009, Bakrie & Brothers faced a similar refinancing issue and had to sell down its direct stake in Bumi Resources. By doing so, Bakrie & Brothers averted default while keeping a large stake in the entity.

“Improved margins and operating cash flows, a competitive and low-cost base, as well as an improved debt maturity and liquidity profile underpin the stability in the companies’ outlook. “Despite a weakening global economy, a strong pipeline of thermal-coal power projects in Asia will continue to drive demand for seaborne coal from both firms.”

Nathaniel Rothschild, co-chairman of Bumi Plc, was quoted by Reuters on Oct. 17 as saying he has “total confidence” that Indonesia’s Bakrie family, Bumi’s largest shareholders, would succeed with plans to refinance a $1.35 billion loan, but said talks with potential partners did not include marketing rights for Bumi’s coal.

“We have to remember that what happened over the summer has been likened to a 1930s-type crisis. That is why the Bakries are in this situation — it is not because they have done anything that we didn’t know they were doing,” Rothschild told Reuters.

Reuters also reported on the same day that sources familiar with the deal have put commodity trader Glencore, already a long-term partner of the Bakries, as a front runner in the refinancing deal, closing in on an agreement to lend $800 million to $900 million. Rothschild said the issues were separate and refinancing talks did not include marketing perks.

Dileep Srivastava, Bumi Resources’ investor relations director, said the key issue was the declining economies in Europe and the United States and had nothing to do with the Bakries or Bumi Resources. Bumi’s shares went up 2 percent to Rp 2,450 on Friday and Berau’s shares were down by 1 percent to Rp 460. []