Asia Pulp & Papers (APP) credit rating has been lowered once again, and the company now faces global debt restructuring following the failure of its Chinese operation to meet bond interest payments.


Credit rating agency Standard & Poor lowered APPs rating after APP China Group (APP China) missed a 19m ($28m) interest payment on its 281.5m 10-year unsecured bond notes, due in 2010.


"What may happen now is that some part of the company could be nationalised, and I think the Indonesian government will also have to step in as it is such a major organisation," said Christian Georges, analyst at Credit Lyonnais.


"The assets outside of Indonesia would be the first to be sold, with the government taking control of those within the country."
Georges also felt that UPM-Kymmene or Stora Enso would be the only groups interested in buying APPs assets.


The debt restructuring could allow APP to offload its Indonesian and Chinese businesses, which Stora Enso is rumoured to be interested in (PrintWeek, 2 February).


"We are watching the situation at the moment, but until an announcement is made by APP on what they plan, we cannot comment," said Stora Enso executive vice-president, communications and investor relations, Kari Vainio.


Last week, APP said it would stop all payments of interest on its debts on the advice of financial adviser Credit Suisse First Boston.


Story by Andy Scott