Good news for Indonesia. But getting to the investment grade threshold could still present a challenge. Ratings analysts continue to note that energy subsidies are still eating into too much of Indonesia's budget. Inflation and "good governance" are also seen as inhibiting factors.
Wayne Forrest
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Moody's Raises Indonesia Rating
By I Made Sentana
JAKARTA, Jan 17 (Dow Jones) — Moody's Investors Service Monday raised
Indonesia's local- and foreign-currency debt ratings one notch to Ba1
from Ba2, citing the country's resilient economy, improving debt and
foreign reserve levels and favorable economic policy.
The outlook on the ratings is stable.
"Momentum in the economy is expected to be sustained by steady
domestic demand, a reasonable pace and sequencing of policy and
structural reforms, and rising foreign direct investment," said Aninda
Mitra, vice president at Moody's and its lead sovereign analyst for
Indonesia.
"Furthermore, the country's debt position and reserve adequacy remain
on an improving trajectory relative to most of its ratings peers," he
added.
Moody's upgrade puts Indonesia's rating one notch below investment
level, and on par with the BB+ ranking assigned by Fitch Ratings, but
one notch above Standard & Poor's BB rating, with a positive outlook.
"The upgrade is already expected, but it reminds investors of
Indonesia's (good) fundamentals," said Bank Danamon economist Helmi
Arman. He added that the upgrade won't erase concerns over the
near-term risk of inflation in Indonesia, which has triggered a
correction in Indonesian assets recently.
The upgrade will help the government's fund-raising efforts both
offshore and at home and encourage further inflows into Indonesian
bonds, helping to deepen the market.
Tuesday, January 18, 2011
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