IndonesiaÆs last market foray dates back to February when the sovereign raised $1.5 billion in bonds via Citi, Deutsche Bank and UBS.
Despite an increasingly expansionary budget, an HSBC credit research report released in August 2007 states the government's finances are in good shape. Its debt-to-GDP ratio is set to fall to 33% in 2008 from 35.5% in 2007, although the countryÆs deficit, due to increase from 1.6% in 2007 to 1.7% in 2008, is much higher than the 0.9% low achieved in 2005, and 1.3% in 2006.
Analysts in the report forecast growth of 5.5% in 2008 and an inflation of 7.5%.
Moody's, meanwhile,has ugraded the country's rating to Ba3 to reflect the country's fiscal prudence and improvements in its external position as well as ongoing structural reforms and sensible policy management. The outlook on the rating is stable.
"Indonesia along with other emerging markets faced a brief test in August
when the sub-prime related tightening of developed country credit markets
induced outflows of portfolio capital," says the report. "But ample foreign
exchange reserve coverage of maturing obligations, coupled with ongoing
inflows from modest current account surpluses and foreign direct investment
provided enough of a balance-of-payments cushion to offset temporary
reversals in portfolio flows and assuage investor sentiment."
Meanwhile, another issue was announced yesterday with Korea's Hyundai Capital Services, a joint venture between Hyundai Motor Company and General Electric Capital Corporation, due to offer a dollar-denominated 144A, Reg-S deal in the coming weeks, subject to market conditions. The issuer, rated Baa2/BBB, has mandated Citi, Deutsche Bank, Goldman Sachs, JPMorgan, and Morgan Stanley to manage the deal.
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