Corporate Debt Concerns Moody's but Indonesia's Rating Kept at Baa3/Stable
Global credit rating agency Moody's Investors Service released a report that includes a warning about the current state of Indonesia's corporate debt. Although Moody's is concerned about the relatively high reliance of Indonesian companies on foreign sources for their debt, the credit rating agency kept Indonesia's sovereign rating at Baa3 with a stable outlook. Moody's noted that Indonesia's government and corporate debt stands at 26.8 percent and 23.7 percent of the nation's gross domestic product (GDP), respectively.
Indonesia's government debt is on the safe side. Moody's noted that government debt of other countries with a Baa3 rating averages around 42 percent of GDP. As such, Indonesia's 26.8 percent of GDP debt position is labelled moderate.
However, as nearly half of Indonesia's total debt is denominated in foreign currencies (especially US dollar and Japanese yen), Moody's expressed its concern even though the Indonesian rupiah rate has stabilized this year (after having depreciated sharply between mid-2013 and the end of 2015 due to monetary tightening in the USA). More than 38 percent of Indonesian government bonds are in the hands of foreign investors.
Regarding Indonesia's corporate debt, the debt level has grown by 11.3 percentage points from 12.4 percent of GDP in 2010 to 23.7 percent of GDP in 2016. Most of additional debt that was taken up by companies after 2010 consists of foreign debt. In case the rupiah comes under severe pressure again it raises chances of defaults for Indonesian companies.
Moody's stated that recent Indonesian defaults that occurred were caused by the rising cost of servicing foreign debts as well as sluggish US dollar income due to low commodity prices. Some notable examples of Indonesian companies that defaulted in recent years include Trikomsel, Berau Coal Energy and Bumi Resources.
Indonesia's Foreign Debt - 2016:
| 2016 | Public Debt |
Private Debt | Total Debt |
| January | $143.4 billion | $164.6 billion | $308.0 billion |
| February | $146.9 billion | $164.6 billion | $311.5 billion |
Indonesia's Foreign Debt - 2015:
| 2015 | Public Debt |
Private Debt | Total Debt |
| January | $135.7 billion | $162.9 billion | $298.6 billion |
| February | $134.8 billion | $164.1 billion | $298.9 billion |
| March | $132.8 billion | $165.3 billion | $298.1 billion |
| April | $132.9 billion | $167.2 billion | $300.1 billion |
| May | $133.5 billion | $168.7 billion | $302.3 billion |
| June | $134.6 billion | $169.7 billion | $304.3 billion |
| July | $134.5 billion | $169.2 billion | $303.7 billion |
| August | $134.0 billion | $169.3 billion | $303.2 billion |
| September | $134.2 billion | $168.2 billion | $302.4 billion |
| October | $136.6 billion | $167.5 billion | $304.1 billion |
| November | $137.7 billion | $166.8 billion | $304.6 billion |
| December | $143.0 billion | $167.7 billion | $310.7 billion |
Indonesia's Foreign Debt - 2014:
| 2014 | Public Debt |
Private Debt | Total Debt |
| January | $127.9 billion | $141.4 billion | $269.3 billion |
| February | $129.0 billion | $143.1 billion | $272.1 billion |
| March | $130.5 billion | $146.0 billion | $276.5 billion |
| April | $131.0 billion | $145.6 billion | $276.6 billion |
| May | $132.2 billion | $151.5 billion | $283.7 billion |
| June | $131.7 billion | $153.2 billion | $284.9 billion |
| July | $134.2 billion | $156.4 billion | $290.6 billion |
| August | $134.2 billion | $156.2 billion | $290.4 billion |
| September | $132.9 billion | $159.3 billion | $292.3 billion |
| October | $133.2 billion | $161.3 billion | $294.5 billion |
| November | $133.9 billion | $160.5 billion | $294.4 billion |
| December | $129.7 billion | $162.8 billion | $292.6 billion |
Source: Bank Indonesia