S&P downgrades ratings of RI banks

S&P downgrades ratings of RI banks

JAKARTA (JP): International ratings agency Standard and Poor's
Corp (S&P) yesterday downgraded its ratings on 15 Indonesian banks
to reflect the economic deterioration caused by the rupiah's rapid
fall.

The agency said in a statement that the sharp currency
depreciation had exacerbated asset-quality difficulties, stemming
from rising corporate borrower defaults, facing Indonesian banks.

Tight monetary liquidity, with attendant high interest rates,
impacted the ability of borrowers to service debt," the American
rating agency said in a statement.

"Standard and Poor's forecasts that non-performing loans-to-
total loans of the Indonesian banking sector will likely increase
to well over 20 percent during calendar 1998."

The rating agency downgraded the rating outlook of five
Indonesian banks, including Bank Danamon Indonesia, Bank
Internasional Indonesia, Bank Negra Indonesia, Bank Niaga and
Bank Umum Nasional.

It also lowered the public information ratings of other 10
banks including Bank Ekspor Impor, Bank Tabungan Negara, Bank
Rakyat Indonesia, Bank Bali, Bank Bumi Daya, Bank Central Asia,
Bank Dagang Negara, Lippo Bank and Panin Bank.

The U.S. dollar has appreciated dramatically against the
rupiah in the financial crisis sweeping Southeast Asia since the
Thai baht's float on July 2.

Besides, Standard and Poor's Corp said on Thursday that it had
downgraded Ongko International Finance Co BV's US$100 million
leased-backed notes due March 2004 to B-minus from BB.

S&P said the rating action follows the downgrading of the
Indonesian bank Bank Umum Nasional's long-term counterparty
rating to B-minus from BB.

The rating of Ongko is based primarily on the issuer's
interest in the U.S. dollar rental payments from PT Bank Umum
Nasional, an Indonesian bank in the PT Ongko Multicorpora.