Achieving investment grade: make or break time for Indonesia
In this article, analyst Harry Su says that Indonesia’s achieving Investment Grade status seems like a given in the coming year, with markets facing more risk if major credit ratings don’t upgrade the country soon. Japan’s credit rating agency (JCR) already did so in July, while Fitch and S&P have upgraded Indonesia to BB+ and BB ratings respectively with optimistic outlooks. Moody’s have kept the rating at Ba2 since September 2009 but recently adopted a more positive future outlook.
Su cites six factors that may influence Indonesia’s future ratings, namely: political climate; national security; higher GDP growth; greater investment; a well managed budget, and buoyant foreign exchange reserves. He believes government debt and GDP predictions are equal to or better than other BBB-ranked countries, though Indonesia must beware of resting on its laurels when it comes to security and improvements in corporate governance and anti-corruption measures. The timing is crucial and while investment grade rating would give investors a new range of Indonesian opportunities, failure to achieve may put the country off the investment radar for several more years.
source & article: The Jakarta Post
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