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.