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.