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Moody’s assigns Baa3 to RI’s Samurai bonds
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A worker checks a sheet of ¥2,000 (US$19) banknotes just off the press at the Takinogawa Plant of the Japanese finance ministry in Tokyo, 10 July 2000. (AFP/Toru Yamanaka)
M
oody's Investors Service has assigned Baa3 ratings to Japanese yen-denominated bonds, which will be issued by Indonesia. The senior unsecured debt was rewarded with a positive outlook.
Moody’s senior credit officer Christian de Guzman said Indonesia's Baa3 issuer rating incorporated the country's low debt levels, narrow fiscal deficits and healthy growth, compared to similarly rated emerging market peers.
The positive outlook on Indonesia's issuer rating reflects emerging signs of a reduction in structural constraints, including its level of external vulnerability and strength of its institutions.
“Indonesia also benefits from the large scale of the economy and a stable — if shallow — banking system that poses limited contingent risks to the sovereign,” Christian wrote in a press statement on Thursday. “The narrow revenue base is a key credit constraint that hampers the government's ability to support economic growth given its commitment to the statutory deficit ceiling of 3% of GDP,” he said.
Other credit challenges, according to the ratings agency, include weak rule of law and control of corruption in accordance with Worldwide Governance Indicators, as well as a shallow domestic capital market, which contributes to Indonesia's reliance on external funding. (ags)
