Indonesia's forex ceilings downgraded
Indonesia's forex ceilings downgraded
HONG KONG (Reuters): Moody's Investors Service said it has downgraded Indonesia's foreign currency ceiling for bonds to Ba1 from Baa3 and that of its bank deposits to Ba3 from Ba1.
In a statement yesterday, the rating agency said the downgrade reflected "the deterioration in the country's financial position as a result of a more than 50 percent drop in the value of the rupiah and a loss of investor confidence".
It said the rupiah's fall had placed considerable stress on the ability of the corporate sector to meet its external debt obligations and would create strain in the banking system.
It also said Indonesia's access to loans of over US$34 billion would be adequate unless there was a further deterioration in confidence.
Moody's added it had put on review for possible downgrade the financial strength ratings of five Indonesian state banks.
The five banks were Bank Dagang Negara, Bank Ekspor Impor Indonesia, Bank Negara Indonesia, Bank Rakyat Indonesia and Bank Tabungan Negara.
The agency said it expected the continued financial crisis would cause serious deterioration in the already weak asset quality of the state banks.
However, the Indonesian government's plan to merge several of the banks raised the possibility of capital increases or other arrangements that could strengthen the banks, it said.
While details of the mergers were unclear, the agency said the fall in the value of the rupiah and tight liquidity have increased the need to restructure the state banks.
The agency said it had also downgraded the long-term deposit rating of Bank Dagang Negara to Ba3 from Ba1 and its long term senior debt to Ba1 from Baa3.
It said the bank's financial strength rating of E plus was on review for a possible downgrade.
Long-term deposits of Bank Ekspor Impor Indonesia were also downgraded to Ba3 from Ba1 while its long-term senior debt stood at Ba1 from Baa3.
Its financial strength rating of D was put on review.
As for Bank Negara Indonesia, its long-term deposits were downgraded to Ba3 from Ba1 and its long-term senior debt to Ba1 from Baa3. Its D plus financial strength rating was on review.
Bank Rakyat Indonesia's long-term deposit rating was cut to Ba3 from Ba1 and its long-term senior debt to Ba1 from Baa3. Its financial strength rating of E plus was on review.
Bank Tabungan Negara had its long-term deposits revised to Ba3 from Ba1 and its long-term senior debt to Ba1 from Baa3. On review is its D plus financial strength rating.
Danamon, Humpuss
The rating agency also said it put the deposit and bank financial strength ratings of Indonesia's Bank Danamon on review for possible downgrade.
The action reflected the deepening of the financial crisis in Indonesia, Danamon's higher than average risk profile, and the uncertainties created by the change in the bank's ownership, the rating agency said in a statement.
It said its review of Bank Danamon would focus on the impact of the current crisis on asset quality and earnings, as well as on the bank's ability to raise additional capital through the markets or from major shareholders.
The Salim Group of Indonesia is expected to buy 19 percent of Bank Danamon and Credit Suisse First Boston the remaining 10 percent.
The ratings for Bank Danamon are as follows:
* for long-term foreign currency deposits -- Ba3 on review for possible downgrade, having been changed from Ba2 to Ba3 due to the latest downgrade of the Indonesian foreign currency deposit ceiling.
* for short-term foreign currency deposits -- Not Prime.
* for bank financial strength -- D on review for possible downgrade.
Moody's has downgraded Indonesia's foreign currency ceiling for bonds to Ba1 from Baa3, and that of its bank deposits to Ba3 from Ba1.
It also it had downgraded to Ba1 from Baa3 three independent power producers in Indonesia.
The cuts, which involved CE Indonesia Funding Corp, DSPL Finance Co B.V. and P.T. Paiton Energy Funding B.V., were because they derived their cash flow from state-backed electricity company PT PLN Persero, it said.
The downgrades follow an earlier cut in Indonesia's foreign currency country ceiling, concern over the devaluation of the rupiah and the resultant increase in the cost of power.
It downgraded the rating of Humpuss Funding Corp's US$150 million issue of 144A first preferred ship mortgage notes to Baa3 from Baa2.
The rating agency said the rating action was taken in conjunction with Moody's downgrade of Indonesia's foreign currency country ceiling for long-term debt to Ba1 from Baa3.
Moody's is maintaining a negative outlook on Humpuss Funding Corp's Baa3 rating, it said.
Humpuss Funding Corp is a wholly-owned subsidiary of Humpuss Inc which is held by a large Indonesian conglomerate PT Humpuss.
The notes are guaranteed by Humpuss Funding's affiliate Cometco Shipping Inc.
Moody's Investors Service also said it cut the rating of the US$200 million senior unsecured notes of Sampoerna International Finance Co B.V., a wholly-owned unit of P.T. Hanjaya Mandala Sampoerna, to Ba1 from Baa3.
The downgrade of the notes, unconditionally guaranteed by P.T. Hanjaya Mandala, followed the lowering of Indonesia's sovereign ceiling for foreign-currency debt ratings to Ba1 from Baa3, Moody's said in a statement.
P.T. Hanjaya Mandala of Indonesia is a leading cigarette company. Sampoerna International Finance is its financing arm.