Outlook on RI long-term ratings stable, S&P says
Outlook on RI long-term ratings stable, S&P says
SINGAPORE (Dow Jones): Standard & Poor's Corp. Monday raised
its long-term and short-term foreign currency ratings on
Indonesia to single-B-minus and C, respectively.
S&P had previously assigned SD (selective default) ratings on
both the long and short-term ratings.
At the same time, S&P also raised its long-term local currency
and senior unsecured debt ratings on the sovereign to single-B
from single-B-minus, and affirmed its C short-term local currency
rating.
The outlook on the long-term ratings is stable.
In a statement, S&P said: "The upgrade follows the
ratification by Indonesia and its bank creditors of a distressed
rescheduling of two foreign currency syndicated loans, with $850
million outstanding, both rated D (default) since April 17, 2000.
"The debt restructuring extends both loans' average life by
4.1 years, reduces their net present value by about 30 percent,
and satisfies the private-creditor 'burden-sharing'
conditionalities of Indonesia's second Paris Club rescheduling of
US$5.8 billion of bilateral principal due in the two years to the
end of March 2002."
S&P has assigned its single-B-minus rating to the two
restructured foreign currency syndicated loans.
S&P said the upgrade reflects its assessment that Indonesia's
net general government debt will peak this year, at about 65
percent of GDP, as will its net public and publicly guaranteed
external debt, at about 90 percent of exports.
The ratings agency said: "High world oil prices and
improvements in Indonesia's underlying revenue position are
driving strong export and budgetary outturns."
It added: "Sustained primary budget surpluses - about 4
percent of GDP this year, tapering to about 2 percent in the
medium term - are expected to drive the sovereign deleveraging
process; the ratio of general government interest to revenue, a
key measure of solvency, is projected to peak at about 37 percent
in 2001-2002, before falling to about 30 percent by 2006."
Although political risks, institutional inadequacies, and
geographic separatism remain significant challenges, they should
be manageable given strong official creditor support and
Indonesia's track record of on-budget fiscal discipline with a
demonstrated ability to deliver primary budget surpluses even
during a crisis, S&P added.
The following are some of the outstanding Indonesian debt and
their current ratings.
Indonesian Debt - Ratings Revised Rating
Senior unsecured $52.7B bank-recapitalization
bonds due Dec. 2000-Dec. 2018 (local currency) B
Senior unsecured $500M 1996 standby syndicated loan
due May 2004 (foreign currency) B-
Senior unsecured $500M 1997 standby syndicated loan
due March 2005 (foreign currency) B-
Senior unsecured US$26M floating-rate notes due
February 2001 (foreign currency) B-
Senior unsecured US$400M Yankee bonds due August
2006 (foreign currency) B-
Ratings Affirmed
Senior unsecured US$2.5B Sertifikats Bank Indonesia
(local currency) C