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.