Bangkok--28 Apr--Standard & Poor's
Standard & Poor's Ratings Services today assigned its 'BB+' senior unsecured long-term foreign currency debt rating to a proposed global unsecured bond issuance by the Republic of Indonesia (foreign currency BB+/Positive/B; local currency BB+/Positive/B; ASEAN scale axBBB+/axA-2). The bond is expected to have a maturity of 10 years, and will constitute part of the country's US$9 billion global medium-term notes program.
The ratings on Indonesia are supported by continuing improvements in the government balance sheet and external liquidity, against a backdrop of resilient economic performance and cautious fiscal management. The ratings remain constrained by Indonesia's (1) low per capita income; (2) structural and institutional impediments to higher economic growth; (3) relatively high inflation; and (4) vulnerability, albeit reduced, to external shocks, in part because of its shallow domestic capital markets.
The positive outlook on Indonesia's sovereign ratings reflects the likelihood of an upgrade if inflation is tamed while balance sheet improvements continue, likely in combination with successful implementation of parts of the administrations' fiscal, administrative, and structural reform agenda.
We may raise the sovereign ratings if inflation pressure diminishes, the external debt burden declines, the sovereign's balance sheet improves, or reforms such as subsidy rationalization suggest that fiscal and external vulnerabilities are further reduced. Conversely, a stalling of reforms or the absence of timely and adequate policy responses to renewed fiscal or external pressures would result in the ratings stabilizing or weakening.
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
David Wargin, Washington, DC (1) 202.383.2298,
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Analyst Contacts:
Agost Benard, Singapore (65) 6239-6347
Elena Okorotchenko, Singapore (65) 6239-6375