Pefindo supports foreign entry
Pefindo supports foreign entry
JAKARTA (JP): Pefindo, Indonesia's only rating agency, does
not object to the possible entry of world-class players such as
Standard & Poor's and Moody's Investors Services into the
country, the company's president, Farid Harianto, said here
yesterday.
"It is no problem if Moody's and S & P open their branches
here. Our rating results will complement with one another," he
said in response to a call for the need of opening up the rating
business to foreign players.
Farid said the negative impact of their entry on Pefindo's
operations would be minimal, because rating agencies have their
own markets and subscribers.
According to existing regulations, both short and long-term
debt securities (CPs and bonds) should be rated by Pefindo before
being sold to investors.
Farid said that Pefindo, which was established in 1994, is
striving to further improve its services in order to match the
growing rating demand at home.
"We are negotiating deals of cooperation with a number of
world-class rating firms, including S & P, in efforts to improve
our rating capability and credibility," he told newsmen following
an extra ordinary meeting of the rating firm's shareholders.
Pefindo at present receives technical assistance from IBCA, a
British rating agency specializing in the financial sector, and
the Rating Agency of Malaysia.
Pefindo has been widely criticized for its inability to meet
the growing rating demand from issuers of short-term commercial
papers, unsecured debt securities with a maturity of between
seven days and four months.
As a result, many issuers trade their short-term commercial
papers even without the agency's rating opinions because they
could not afford to wait for Pefindo to act. Short-term
commercial papers are usually issued to meet issuers' immediate
needs for fresh funds.
Farid denied such an allegation, saying that the charge is
baseless. "If there were many unrated papers or those with below-
standard grades being traded, many banks would have received
sanctions from Bank Indonesia," he said.
According to Bank Indonesia's regulations, which became
effective in February, all commercial papers traded through banks
should have a minimum investment grade of A4.
Farid acknowledged that many issuers of short-term debt
instruments rolled over the maturity of their papers before Feb.
1 to escape the rating regulations.
"There are many unrated papers still circulating in the
market," he said.
Application
The number of companies applying for Pefindo's ratings has
reached 99 since its establishment two years ago, with an average
capitalization of Rp 100 billion (US$45.45 million) per issue.
Farid said that of this number, 31 applications are currently
being processed.
Yesterday's shareholders' meeting agreed to appoint Kartini
Muljadi, a law consultant, Aibar Durin of the Pension Funds of
Bank Indonesia, Utomo Yusodirdjo of Artha Investa Argha and
Kadirun Y. Landau of the Pension Funds of the state-owned Merpati
Nusantara Airline as commissioners of the rating firm.
Binhadi, a former managing director of Bank Indonesia, also
retained his job as chief commissioner. (hen)