S&P: PPSI-II certificates BB+

Standard & Poor's said it assigned its BB+ long-term foreign currency issue rating to the proposed issue of benchmark-sized global Sukuk trust certificates by Perusahaan Penerbit SBSN Indonesia II, a fully owned special purpose vehicle of the Republic of Indonesia.

The rating on the certificates reflects S&P's view that, under the related lease and repurchase agreement between the government and PPSI-II, the government is obliged to make all payments to PPSI-II to ensure that the issuer has sufficient funds to make full and timely periodic distribution and principal payments to certificate holders, the agency said.

S&P said it rated this issue on par with the sovereign's commercial financial obligations. This is because, in S&P's view, the sovereign's contractual commitment gives the government a strong incentive to treat its obligations to PPSI-II under this transaction pari passu with its other obligations, including conventional debt, the agency said.

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