Why SP upgraded ratings on Indonesia

SINGAPORE  - S&P Global Ratings has answered a number of frequently-asked questions related to its recent upgrade of Indonesia and related rating actions in a new report published today.

"We upgraded Indonesia to reflect its strong economic growth prospects and supportive policy dynamics, which we expect to remain in place following the re-election of President Joko Widodo," said S&P Global Ratings credit analyst, Andrew Wood.

The report says Indonesia's infrastructure continues to improve, and that, as the Government looks to invest more in the country's vast human capital, the investment outlook should improve.

Likewise, household indebtedness remains low, and with a strengthening labour market, private consumption will continue to underpin robust headline growth.

The report looks at Indonesian companies that would be sensitive to a further upward or downward movement in the sovereign rating.

S&P Global Ratings says it believes the financial profile of PT Jasa Marga (Persero) Tbk. could weaken over the next two to three years due to an acceleration in capital expenditure and a consequent sharp increase in debt and associated interest costs.

"We therefore lowered our assessment of the company's stand-alone credit profile."

S&P says: "In our opinion, Indonesian banks, particularly the large and State-owned commercial banks, are well- positioned to benefit from improving economic conditions over the next 12-18 months.

"That drove the revision in our Banking Industry Country Risk Assessment on Indonesia to group 6 from group 7." www.stgandardandpoors.com (ATI).