Jakarta. Indonesia’s plan to raise its proceeds target from selling dollar-denominated medium-term notes by $10 billion amid challenging economic conditions is unlikely to affect the country’s ratings, major agencies said on Tuesday.
Standard & Poor’s Ratings Services said in a statement on Tuesday that its ratings on Indonesia “are unaffected” by the $10 billion upsizing of the country’s $30 billion medium-term note program.
S&P is the only major agency that rates Indonesia below investment grade (BB+, stable investment outlook), highlighting that it is waiting for more concrete results from the government’s economic policy reforms.
“Indonesia plans to use the larger program for the government’s general budgetary purposes including, but not limited to, the refinancing, repurchase or retirement of indebtedness,” S&P said in the statement.
“The ratings on Indonesia balance the country’s low per capita income and developing policy and institutional settings against the improved credibility of its monetary policy, buoyant economic growth, and sound public finances.”
In separate statements on Tuesday, Moody’s Investor Service assigned the medium-term notes with a provisional Baa3 investment-grade rating and a stable outlook.
“Indonesia’s Baa3 government bond rating is supported by comparatively narrow fiscal deficits, low public indebtedness, the large size of the Indonesian economy and its healthy medium term GDP growth prospects,” Moody’s said in the statement.
Meanwhile, Fitch Ratings, another one of the top three international rating agencies, assigned Indonesia’s dollar-denominated medium-term notes with a BBB- rating, the lower end of investment grade assets, according a statement. Fitch expects growth in Southeast Asia’s largest economy at 4.8 percent this year and 5.3 percent next year.
Moody’s, which forecast a 4.7 percent growth on Indonesia this year and next, echoed the sentiments, saying that the stable outlook is in line with expectations that “Indonesia’s growth and fiscal metrics will continue to compare favorably to similarly rated peers over the rating horizon.”
However, Moody’s analysts noted that there will still be some “near-term credit challenges in the form of lower terms of trade, slow investment growth and external financial volatility.”