SINGAPORE: Moody’s Investors Service has assigned a definitive rating of Baa3 to the Government of Indonesia’s US dollar-denominated bond issuance maturing in 2022.
The Baa3 rating of the bond maturing in 2042 remains unchanged following a tap bond offering on this issuance. Both bonds have stable outlook.
As cited in Moody’s official website, Moody's definitive rating for this debt obligation confirms the provisional rating assigned on April 17, 2012. Moody's rating rationale was set out in a press release published on the same day.
Indonesia's sovereign rating has been supported by increasingly robust domestic demand over the past few years, which has helped to shield the economy from the global financial crisis. Real GDP grew by 6.5% in 2011, and the government expects economic growth to reach 6.0% this year.
This rapid pace of growth looks to be sustainable over the medium-term, aided by enhanced prospects for infrastructure development and foreign direct investment.
In addition, government finances continue to be managed conservatively with deficits averaging below 2% of GDP since 2001. Fiscal sustainability could be further enhanced by the flexibility to reduce fuel subsidies, although political and structural issues continue to impede the effectiveness of government expenditure.
Indonesia's foreign currency reserve adequacy has also benefited since the crisis from strength in non-oil and gas commodities exports and larger FDI and portfolio inflows, some of which may be reversible. As a result, the stock of foreign currency reserves have more than doubled from US$51.6 billion at end-2008 to US$110.5 billion in March 2012, more than two times residual short-term external debt. (T07/aph)