S&P Upgrades Indonesia to Investment Grade Amid Stronger Growth

Sp Upgrades Indonesia To Investment Grade Amid Stronger Growth

(Bloomberg), S&P Global Ratings raised Indonesia's credit rating to investment grade, bringing it in line with the other two main rating companies and paving the way for more fund inflows into Southeast Asia's largest economy.

The sovereign rating was lifted to BBB- from BB+ and the outlook was changed to stable, S&P said on friday. Both Moody's Investors Service and Fitch Ratings have a positive outlook on their assesments of the nation's debt.

The upgrade may boost the appeal of Indonesian assets among conservative Japanese Institutional investors and help attract as much as $5 billion in funds, Goldman Sachs Group Inc. said in March.

S&P had been slow to follow Moody's and Fitch in raising the nation's debt to investment grade because of growth concerns and rising bad debts. Momentum in the economy has picked up this year as exports rebounded, with the International Monetary Fund forecasting growth of 5.1 percent in 2017.

The S&P upgrade comes on the back of a successful tax amnesty that earned the government more than $11 billion in revenue, helping to ease pressure on the budget and pay for much-needed infrastructure projects. President Joko Widodo's government cut public spending last year to meet a legal fiscal defisit cap of 3 percent of gross domestic product and built up foreign exchange reserves to a more than five-year high of $123 billion (Sumber : BI Kantor Perwakilan Lampung-MAY).

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