Moody's Upgrades Indonesia's Sovereign Ratings To Ba1

SINGAPORE, KOMPAS.com - Moody's Investors Service has today concluded its rating review, which was initiated on December 1, 2010, and upgraded the Indonesian government's foreign and local-currency bond ratings to Ba1, from Ba2.

Rating rationale

The main reasons for the decision are:

(1) Indonesia's economic resilience is accompanied by sustained macroeconomic balance;

(2) The government's debt position and the central bank's foreign currency reserve adequacy are improving; and

(3) The prospects for foreign direct investment inflows are also improving, and this is expected to fortify Indonesia's external position and economic outlook.

In addition, the upgrade affects the country's ceiling for foreign currency (FC) bonds, which has consequently been moved up by a notch to Baa3, and the FC bank deposit ceiling, which has been moved up to Ba2. The outlook is stable.

Moreover, the local currency bond and deposit ceilings have been raised to Baa1 from Baa2. The country ceiling for short-term FC debt is “Not Prime“ and remains unaffected by this action.

These ceilings act as a cap on ratings that can be assigned to the foreign and local currency obligations of other entities domiciled in the country.

Rationale for the upgrade to Ba1