||Asean Affairs 11 July 2013
Moody's assigns (P)Baa3 rating to Indonesia's global bond offering
Moody's Investors Service has assigned a provisional rating of (P)Baa3 rating to the government's announced bond offering in its existing U.S. dollar-denominated global medium-term note program.
The outlook assigned by Moody’s is stable.
“Indonesia's Baa3 sovereign issuer rating incorporates a moderate assessment of the country's overall economic strength that balances robust growth performance against relatively low GDP per capita,” Moody’s said in an official release.
“While real GDP growth came in above 6 percent for the third consecutive year in 2012, rising inflation, policy tightening, and lower prices for Indonesia's commodity exports could weigh on economic growth in 2013.
Nevertheless, trend growth is likely to be maintained above those of similarly rated countries over the medium term,”
Moody’s added that prudent fiscal management had contained budget deficits at low levels and had steadily reduced the government's debt burden as a share of GDP over the past decade.
“As a result, Indonesia's fiscal and debt ratios are now more favorably placed than many of its higher-rated peers. Fuel subsidy reforms passed in June 2013, the first since 2008, addressed an increasingly large strain on the
government's finances and will likely keep the fiscal deficit under the legal deficit cap of 3 percent of GDP,” Moody’s said.