Indonesian Firms Likely More Prepared Against Forex Losses in 2015: Moody’s


FEBRUARY 08, 2015

Jakarta. Indonesian companies are likely to be more prepared for foreign-exchange risks this year despite modest growth and a depreciated rupiah, an analyst at international ratings agency Moody’s Investor Service said.

Brian Grieser, vice president and senior analyst of corporate finance at Moody’s Investor Services, said that the ratings agency’s outlook for Indonesian firms is still stable, noting that the weak rupiah has now become relatively manageable for most.

“There are couple of exposed firms, but even among the few, they have cash houses or hedges or some revenues in US dollars,” Grieser said during a media briefing in Jakarta on Friday.

He added that these risk management efforts should give the companies more of a buffer for the year.

The rupiah has been on a downward trend against the dollar as the United States’ economy continues to recover.

The rupiah has weakened by 1.4 percent to 12,613 against the dollar so far this year, according to data from Bank Indonesia.

Among the Indonesian companies most exposed to the weak rupiah, according to Moody’s, are cable television provider MNC Sky Vision and MNC Investama, an investment firm controlled by businessman-turned-politician Hary Tanoesoedibjo.

Other companies that Grieser named include textile company Sri Rejeki Isman and tire maker Gajah Tunggal Pratama.

“On average, more than 80 percent of their debt and significant costs are denominated in foreign currencies, while all or some of their revenues are in Indonesian rupiah,” Grieser added.

The depreciating rupiah has taken an especially hard toll on a number of industries in Indonesia — such as aviation and manufacturing — where a significant portion of spending is dollar-denominated but revenues are rupiah-denominated.

For example, state-owned flag carrier Garuda Indonesia posted a $298.8 million loss in the first nine months last year, $6.6 million of which was losses from foreign-exchange rates.

Garuda recently formed a Rp 1 trillion ($79 million) cross-currency swap hedging agreement with three lenders — Bank Negara Indonesia, CIMB Niaga and Standard Chartered bank — in attempts to alleviate foreign exchange pressures on its balance account.

Indonesian firms tend to seek offshore financing to compensate for foreign exchange losses.

Overseas debt climbed 11.8 percent year-on-year to $294.4 billion last November, according to data from Bank Indonesia.