Fitch rates Indonesia bonds BB-

Fitch Ratings said it assigned an expected long-term foreign currency rating of BB- to the Republic of Indonesia's $1.25 billion 10-year and 30-year global bonds to be issued on Oct. 5.

The Oct. 1 announcement of the more than 87% hike in fuel prices for premium gasoline, diesel fuel and kerosene was larger than expected. Fitch notes this decisive gesture by the government came on the heels of the central bank's monetary policy tightening in August and September and signals the administration's commitment to maintaining its fiscal consolidation process and to help stabilize currency volatility.

Fitch said the government has managed to implement a politically difficult measure relatively smoothly. Fitch also anticipates the possible adoption of a new mechanism to apply automatic tariff adjustments to fix fuel subsidy amounts could pave the way toward a more realistic alignment toward market prices.

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