Fitch Also Raises The Rating of Eight Banks

Fitch Ratings also raised the long-term credit rating of eight banks following the increase in the Government of Indonesia's debt rating from BB + to BBB-. The increase is in the debt securities denominated in rupiah.

Fitch Ratings

The eight banks are PT Bank Mandiri Tbk (BMRI), PT Bank Central Asia Tbk (BBCA), PT Bank Rakyat Indonesia Tbk (BBRI), PT Bank BNI Tbk (BBNI), Lembaga Pembiayaan Ekspor-Impor Indonesia (LPEI), PT Bank OCBC NISP Tbk (NISP), PT Bank International Indonesia Tbk (BNII), and PT Bank CIMB Niaga Tbk (BNGA). The overall outlook for the bank declared stable.

Rating of three banks, BMRI, BBRI, and BBNI, as well as one institution, namely LPEI, increase from BB + to BBB-. "The rating reflects the high probability and the strong support from the government as the controlling shareholder. Banks have a significant impact on the economy of Indonesia," said Julita Wikana, Director of Fitch's Financial Institutions Team.

The ranking of BNGA, NISP, and BNII increases from BB + to BBB. This rating reflects the strong support of the foreign holding company, especially during the time when Indonesia entered the investment grade position. The increase in ratings was also supported by the commitment of the holding company to put Southeast Asia as a core part of their strategy. Fitch calculates, their three exposures in Government Securities (SUN- Surat Utang Negara) owned by Indonesia declined from year to year, lower than the previous ownership of the three state-owned banks mentioned above.

While the upgrade of BCA, was assessed from its viability assessment from the track record and strength of credit distribution. Fitch's affirmation of the viability of the other banks reflects their stable credit profiles despite the global uncertainty becomes a threat of the moderate domestic economic outlook.

Source: Kompas

Indonesian Future Banking Can Easily Obtain Overseas Loan

The banking industry welcomed the increase of Indonesia's investment rating to BBB-investment grade category. The banks would easily obtain foreign loans with cheaper interest rates. This was stated by Chairman of the Association of National Commercial Banks (Perhimpunan Bank-Bank Umum Nasional - Perbanas) Sigit Pramono in Jakarta, Friday (16/12).

Indonesian banking

"Of course we welcome this announcement. With the increase of Indonesia's rating from BB + to BBB-by Fitch rating, Indonesian banks would obtain overseas loans easier with cheaper rates," said Sigit.

He explained, the budget cost or operational cost will obviously go down with the cheaper loan rates.

"In addition, it also allows the banking industry to issue more corporate bonds in the future inline with the increased market confidence and overseas confidence," said Sigit.

Furthermore, Sigit explained, Indonesian banks will be easier to borrow foreign currency from abroad with this new investment grade status, making it easier to find the source of foreign currency liquidity whenever there is pressure or foreign currency liquidity problems.

Source: Analisa

The Credit Rating of Indonesian Government Debt is Upgraded by Fitch

Fitch, one of the world rating agency, on Thursday (12.15.2011), raised Indonesia's debt rating from BB + to BBB-rated as an investment grade as 15 years ago.

investing

The increase in these ratings would reduce the risk in investing in Indonesia and lure foreign investors to the Indonesian market. According to economist in Samuel Securities, Lana Soelistianingsih, although the increase is quite surprising because was expected to be given in 2012, investors have predicted this possibility, considering the development of Indonesia's solid macroeconomic performance.

Earlier, on February 24, 2011, Fitch raised Indonesian outlook from stable to positive. The economic growth remained high at 6.5 percent with the low inflation rate (less than 4 percent), a stable exchange rate, low level of budget deficits and healthy GDP ratio, "Lana said in Jakarta on Friday (16 / 12/2011).

This news is expected to increase the stock and money markets today. The negative sentiment on global markets spread to Asia yesterday.

Asian currencies weakened against the U.S. dollar, including the rupiah closed down slightly to Rp 9091 per U.S. dollar (Bloomberg middle rate).

Lana estimates, Asian markets will bounce back positive today because there is an improvement in global markets sentiment. The Indonesian market will experience a euphoric welcoming Fitch's investment grade rating. Indonesian Rupiah is expected to strengthen in the range of Rp 9020 to Rp 9050 per U.S. dollar.

Source: Kompas