Moody's Upgrades Indonesia's Sovereign Ratings To Ba1

Furthermore, the share of non-resident holdings of Rupiah-denominated Indonesian government debt has risen and a disorderly unwinding could be problematic amidst Indonesia's relatively shallow domestic capital market.

What could change the rating - up

Greater assurance of continued monetary and price stability and soundness of bank supervision, gradual deepening of local capital and credit markets to support the government's onshore debt finance-ability, and further inflows of foreign direct investment to support the external balance of payments.

What could change the rating - down

Sustained loss of inflation control and monetary stability or a large shock to the country's fiscal, debt and foreign currency reserve position --derived, for instance, from policy mismanagement or some other domestic political shock which results in a deep deterioration of resident and investor confidence.

Previous rating action and methodology

Moody's last rating action on Indonesia was on December 1, 2010 at which time the Ba2 sovereign rating was placed on review for upgrade. The principal methodology used in this rating was Moody's Sovereign Bond Methodology published in September 2008.

Regulatory disclosures

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, and public information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources.

However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.