'No immediate plan to raise RI rating'

'No immediate plan to raise RI rating'

SINGAPORE (Dow Jones): U.S.-based ratings agency Standard & Poor's Corp. doesn't expect to upgrade its sovereign debt rating for Indonesia in the near term, the agency's regional head told Dow Jones Newswires Monday.

Cecile Saavedra, head of Asia Pacific for S&P, said a ratings change is unlikely to change the country's CCC+ sovereign debt rating for Indonesia "in the foreseeable future."

The agency is likely to maintain its stable outlook for the near term despite signs of a recovery in the country's equities market and currency, she said.

Many economists believe - and official data supports - that Indonesia's economy has bottomed out and is slowly turning around.

Bankers say this has led to a market re-rating of the country's sovereign risk. Spreads between Indonesia's dollar- denominated Yankee bond and comparable U.S. Treasurys for instance, have rallied enormously, as the perceived political risk associated with the country has tumbled in the wake of peaceful elections last month.

This has led to calls for international ratings agencies to follow market sentiment and upgrade. The agencies argue however that Indonesia still has substantial bank and corporate restructuring to go through and say the country doesn't yet merit an upgrade.

Saavedra said growing concerns over possible loan defaults by companies operating power plants in Indonesia aren't likely to affect the country's sovereign rating.

The government and its power producer PT Perusahaan Listrik Negara (PLN) have said they are seeking to renegotiate contracts with its main, mostly foreign, power suppliers given PLN's weak financial position. This has raised fears of default as PLN isn't paying many of its suppliers for power.

The power projects are financed to a large extent by export credit agencies and defaulting to them would create problems for other sovereign lending to Indonesia, from countries such as Japan.

Asked about China and Taiwan, Saavedra said political risk is a factor when considering a rating, but wouldn't say whether the agency is considering a ratings change for the two countries.