Pefindo to get assistance from Standard & Poor's

JAKARTA (JP): PT Pefindo, Indonesia's only rating company, signed an agreement yesterday with Standard & Poor's Ratings Services, of the United States, to cooperate on analytical and business development.

Hendrik J. Kranenburg, the executive vice president of Standard & Poor's said that his agency would share its rating expertise, knowledge of the capital market and analytical criteria with Pefindo.

"Standard & Poor's will also provide assistance on marketing, publishing and other credit rating operations," Kranenburg said to journalists about the terms of the agreement.

Pefindo's president, Farid Harianto, said the Indonesian rating agency will, in return, provide Standard & Poor's with business development assistance in Indonesia and share its considerable knowledge of the local debt market and debt issues.

Farid described the cooperation agreement as a breakthrough for Pefindo, which had sought Standard & Poor's technical assistance since the early stages of its operations.

"It is an honor to receive technical assistance from a leading rating agency such as Standard & Poor's," he said while admitting that it took Pefindo more than nine months to convince the American agency that it should forge links with Pefindo.

Pefindo, established in late 1993 as the first Indonesian rating agency to facilitate the development of the fixed income market, is the only rating firm allowed to assign ratings on local issuers of commercial papers.

The rating agency, which provides objective, independent, credit opinions on the local market, had rated 80 companies as of June 30.

Kranenburg said that the cooperation agreement was made after the American firm learned of the independence of Pefindo's rating activities and to follow Standard & Poor's long tradition of working with local rating agencies in both developed and emerging markets.

"For example, Standard & Poor's activities in France, Sweden and Spain all began with partnerships with local rating firms. Moreover, Standard & Poor's has established affiliations with local rating firms in Argentina, Chile and India within the past year and is exploring other opportunities," Kranenburg noted.

He said however that the partnership with Pefindo is currently limited to only technical assistance and business development cooperation.

Like Kranenburg, Farid said the cooperation agreement does not yet include an option of allowing Standard & Poor's to acquire a portion of Pefindo's shares.

"We'd better leave the option open. Some time in the future, we may invite Standard & Poor's into equity participation," Farid said.

Standard & Poor's, one of the world's leading rating firms, has 1,300 employees at its 16 offices and maintains ratings on more than US$5 trillion in debts of corporate, public sector and financial institutions in 60 countries.

The agency, which publishes its risk opinions and financial market commentaries through electronic and print media to worldwide financial market participants, has been rating bonds since 1916.(hen)