Thursday, September 17, 2009

Moody's ups Indonesia's rating, still junk status

Original source: Reuters, Wed Sep 16, 2009 6:10am EDT

Moody's Investors Service raised Indonesia's sovereign rating by one notch to Ba2 on improving economic prospects for Southeast Asia's biggest economy, sparking a jump in the rupiah IDR= and bond prices.

Moody's analyst Aninda Mitra said Indonesia's economy could weather global uncertainties better than other sovereigns in the Ba-rating category and compared with its regional peers.

He said management of the economy was improving and the appropriate policy stance was expected to persist in the foreseeable future.

"These developments highlight the growing credibility and predictability of government policies, and are expected to ensure macro-economic stability," he said.

Despite the move, Indonesia's rating is still two notches below investment grade and only one above the Philippines. It is also still several notches below neighbours Singapore, Malaysia and Thailand, all of which are investment grade.

"It will likely need at least two years for the country to achieve an investment grade rating," said economist Anton Gunawan of Bank Danamon. "This will require significant progress."

The rupiah, Asia's best performing currency this year, jumped 1.8 percent to 9,710/dollar on the news, bringing its gains this year to 13 percent.

The yield on the most actively traded 5-year debt slipped seven basis points to 9.23 percent, while the 10-year yield dropped 8 basis points to 9.92 percent, traders said. The country's credit default swap also narrowed by 15 bps to 170/180, traders said.

Indonesia, long regarded as a laggard in the region, is back on many investor radar screens thanks to its economic resilience and political stability under President Susilo Bambang Yudhoyono.

Its economy is one of the few in Asia expected to grow this year because it is less dependent on exports than its neighbours. The World Bank this week revised up its growth forecast to 4.3 percent in 2009 from 3-4 percent, citing resilient consumption….for complete news please visit
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