Bangkok--2 Mar--Standard & Poor's
Standard & Poor's Ratings Services today assigned its 'BB-' senior unsecured foreign currency debt rating to the Republic of Indonesia's US$1 billion, 10.375% fixed rate notes due May 4, 2014, and US$2 billion, 11.625% fixed rate notes due March 4, 2019.
Both issues are drawdowns from the country's US$4 billion global medium-term note (MTN) program. Standard & Poor's does not expect these bond issuance amounts to lead to a material worsening in Indonesia's public sector (or general government) external debt position, as the current issue only adds under 1% of GDP to Indonesia's modest gross government external debt of estimated 17% of GDP as of February 2009.
"The sovereign credit ratings (foreign currency BB-/Stable/B; local currency BB+/Stable/B) on Indonesia are underpinned by improvements in the country's public debt and fiscal position achieved over the past few years, and its enhanced external liquidity cushion," said Standard & Poor's credit analyst Takahira Ogawa.
General government debt is estimated to have fallen to about 32% of GDP in 2008, nearly half its 2004 level, owing to consistent primary budget surpluses and strong nominal GDP growth. In our view, the country's external liquidity position remains moderately strong, notwithstanding some recent declines, with foreign exchange reserves at US$50.9 billion as of January 2009.
Standard & Poor's believes the government's latest 2009 spending plan and associated rise of the fiscal deficit to a targeted 2.5% GDP do not represent a weakened commitment to fiscal prudence, and expects the public debt ratios to remain on an improving path.
The stable outlook on the sovereign ratings reflects Standard & Poor's view that debt reduction in recent years and an improved policy environment, particularly the flexible exchange rate regime, will enable the government to sustain an adequate external liquidity cushion in the face of ongoing negative external shocks. Any material deterioration in external liquidity or debt indicators could put pressure on the sovereign ratings.
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contacts:
Takahira Ogawa, Singapore (65) 6239-6342
Elena Okorotchenko, Singapore (65) 6239-6375
Key Contacts:
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