HONG KONG, 19 May 2006 - Moody's Investors Service said on Friday it had upgraded Indonesia's sovereign rating by one notch to B1, citing substantial and steady improvement in government finances. The outlook on the rating is stable, it said in a statement.

"We were expecting the upgrade. We see Indonesia on an uptrend in terms of credit rating because of the fundamentals which have improved over the past few years. "The upgrades should continue as Indonesia lags other countries in the region in terms of rating recovery. It took more time for Indonesia to get rid of the problems after the Asian crisis. "The fiscal deficit and monetary stabilisation are the major improvements."

"It is on its way to success in fighting inflation. This will allow them to reduce interest rates. But the background is not favourable -- with Japanese interest rates seen rising and with the end of carry trades." "The market has been expecting Moody's to upgrade to B1. The S&P rating is on positive. The market is looking for an upgrade from S&P probably in early 2007.

"It basically underscores the fact that Indonesia is an improving sovereign credit, which is why the CDS market... trades Indonesia tighter than the Philippines." "The upgrade is widely expected. It comes at a time when the market is very volatile, so it is a positive news for Indonesia." "There is no surprise on this. I think there could be a short-term bounce in the (Indonesian) dollar bonds but I don't think it's going to change anyone's view of the underlying strength of the credit... It's a solid double-B-minus rating."

  08 January 2009 · Papua earthquakes drive thousands into tent camps
  08 January 2009 · Central bank cuts rate by 50 basis point to 8.75%
  07 January 2009 · FPI holds warfare training and recruitment session for Gaza
  06 January 2009 · No embassy in Bandung, demonstration at German cultural institute
  06 January 2009 · One liter of petrol for 50.000 Rupiah in West Timor
  05 January 2009 · Two more aftershocks hit Manokwari
  04 January 2009 · Manokwari airport closed after quakes
  04 January 2009 · 7.8 magnitude quake hits near Manokwari, 25 aftershocks reported
  03 January 2009 · Indonesia to launch stimulus to boost economy
  02 January 2009 · President: 'Indonesia supports Palestinian people's struggle'