Fitch assigns BBB rating to Danantara Investment Management

Fitch Ratings has assigned a BBB (triple B) credit rating to the global medium-term notes (MTN) programme of PT Danantara Investment Management (DIM), including its planned inaugural bond issuance.

In a report released in Jakarta on Wednesday, Fitch stated that the BBB rating assigned to the bonds is equivalent to the long-term credit rating of DIM as an issuer. This assessment is based on the fact that the bonds to be issued represent the direct, unsecured obligations of the company and rank pari passu with its other obligations.

Fitch considers that the Indonesian government has the potential to provide full support to DIM if required. Consequently, DIM’s rating is aligned with the long-term credit rating of the Indonesian government, which currently stands at BBB with a negative outlook. This assessment is reflected in a support score of 55 out of a maximum of 60 points.

“The Issuer Default Rating (IDR) of DIM is driven by Fitch’s assessment that it is ‘virtually certain’ for the company to obtain support from the Indonesian government, which currently has a BBB rating with a negative outlook, based on Fitch’s Government-Related Entities Rating Criteria,” the report noted.

DIM holds full responsibility for the MTN programme and all debt securities issued under the scheme. The company plans to issue its inaugural bonds through this global MTN programme, with the proceeds intended to support investment activities in accordance with the company’s mandate.

Furthermore, Fitch stated that any downgrade in DIM’s IDR would lead to a corresponding downgrade in the company’s issued bonds. Downgrade risks may also arise if the Indonesian government’s sovereign rating is lowered or if the government support score for DIM falls below 45 points. Conversely, an upgrade in DIM’s IDR would lead to an increase in the rating of the company’s bonds. An upgrade in Indonesia’s sovereign credit rating could also potentially drive an increase in DIM’s rating, provided that the assessment of government support for the company remains intact.