Moody's: Indonesia bonds Baa3

Moody's Investors Service said it assigned Baa3 senior unsecured debt ratings to the Japanese yen-denominated bonds to be issued by the Government of Indonesia.

Indonesia's Baa3 issuer rating incorporates the country's low debt levels, narrow fiscal deficits and healthy growth as compared to similarly rated emerging market peers, Moody's explained.

Indonesia also benefits from the large scale of the economy and a stable – if shallow – banking system that poses limited contingent risks to the sovereign, the agency said.

The narrow revenue base is a key credit constraint that hampers the government's ability to support economic growth, given its commitment to the statutory deficit ceiling of 3% of GDP, Moody's added.

Other credit challenges include weak rule of law and control of corruption, as well as a shallow domestic capital market, which contributes to Indonesia's reliance on external funding, the agency said.

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