CSFB sees higher credit rating for Indonesia

CSFB sees higher credit rating for Indonesia

LONDON (Reuter): Indonesia and other 16 countries could
receive credit rating upgrades within the next 12 months, a
research report by investment bank Credit Suisse First Boston
said yesterday.

Only two of the 50 countries covered by the report -- Thailand
and Turkey -- could have their long-term debt ratings lowered
during that period, CSFB said.

CSFB assigned a positive outlook to Canada, Chile, Mexico,
Panama, Trinidad & Tobago and Uruguay in the Americas; Australia,
China, Hong Kong, Indonesia, Malaysia and the Philippines in the
Asia and Pacific region; and Hungary, Lithuania and Romania in
Europe. Although China and Hong Kong are now one country, they
are counted separately because they have individual credit
ratings.

Greece and Sweden were given a split stable/positive outlook.

"A positive outlook implies CSFB anticipates a credit rating
upgrade within 12 months," the report said.

Continued high growth, coupled with low or manageable
inflation and increased political stability could reduce the
risks in China, Hong Kong, Indonesia, Malaysia and the
Philippines.

But a reduction of credit risk in the region is largely
dependent on the governments' ability to stick to their reform
programs.

"China has recorded the fastest growth in the developing world
over the past ten years," the report said. "Following its ratings
upgrade by S&P in May, we look to another positive ratings action
within the next 12 months."

In Australia, the main obstacle to an upgrade is a continuing
current account deficit of around 3.75 percent of GDP, CSFB said.

Eastern European economies are achieving economic growth after
years of stagnation, although improvements are dependent on
reforms being pushed through.

In Hungary, CSFB is "cautiously optimistic on the rating
outlook", given the outlook for continued growth. Lithuania and
Romania are expected to catch up their central European peers as
reforms start to kick in.

Estonia, which is not yet rated, is also regarded positively,
and "is firmly situated in the investment grade range", CSFB
said.

In Latin America, the improved outlook for Mexico is driven by
external factors, namely its successful return to the global
capital markets which has improved its payments profile, and
reduced the balance of payments constraint on growth, and higher
oil prices.

Panama and Trinidad & Tobago are improving on the back of
internal reforms, and Uruguay is benefiting from becoming a
regional banking and tourist center, the report said.

Among developed economies, Sweden has come out of a recession
and both it and Canada are seeing economic growth and reduced
deficits.