April 9, 2013 / 4:57 AM / in 5 years

Fitch Affirms Indonesia Exim at 'BBB-'/Stable

(The following statement was released by the rating agency) JAKARTA/TAIPEI/SINGAPORE, April 08 (Fitch) Fitch Ratings has affirmed Lembaga Pembiayaan Ekspor Indonesia's (Indonesia Exim) Long-Term Issuer Default Rating (IDR) Rating at 'BBB-' with Stable Outlook. A full list of ratings is provided at the end of this commentary. Rating Action Rationale Indonesia Exim's ratings are aligned with those of the Indonesian sovereign, reflecting Fitch's expectations of a very high propensity of state support (BBB-/Stable) in case of need. This support is based on its important role as a policy institution to support Indonesian exports, its 100% state ownership and control by the Ministry of Finance (MOF). Established under the Act of the Republic Indonesia number 2/2009, Indonesia Exim can only be dissolved by a Special Act. No Viability Rating is assigned as it is difficult to assess such policy-type institutions on a standalone basis. The government has committed to maintain Indonesia Exim's capital at a minimum of IDR4tln and to distribute a maximum 10% of its surplus for dividend and employees compensation, as stipulated in the special Act 2/2009, to support the bank's policy role. State support has been reinforced through the establishment of a funding facility from MOF in 2011 from which it can draw in times of need. Rating Drivers and Sensitivities An upgrade of the Indonesian sovereign rating may lead to a corresponding change to Indonesia Exim's ratings provided that its linkages to and continued strong support from the Indonesian government remain unchanged. Downward rating pressure could arise from a downgrade in the sovereign's rating or from a dilution in the perceived propensity of government support although Fitch believes this to be a remote prospect in the near- to medium-term. Indonesia Exim's euro medium term notes (EMTN) rating is rated as the same level as Indonesia Eximbank's IDR as they represent senior, unconditional and unsecured obligations of of the bank. Changes to Indonesia Exim's IDR would lead to similar changes to its EMTN rating. Indonesia Exim's financial performance remained satisfactory, with modest profitability, improved asset quality and strong capitalisation. Its non-performing loan (NPL) ratio eased to 4.1% at end-9M12 but remained higher than the Indonesian commercial banks' average of 1.9% at end-2012. Its policy role makes loan quality fairy susceptible to the uncertain global economic climate. In view of its above average NPL ratio, maintaining strong core capital above 20% over the medium term is appropriate (end-9M12: 25.8%). Fitch notes that Indonesia Exim's funding facility from MOF and its quasi-sovereign status enhance its funding flexibility and mitigate funding risk during volatile market conditions. The details of all rating actions are: - Long-Term IDR: affirmed at 'BBB-'; Stable Outlook - Support Rating Floor: affirmed at 'BBB-' - Support Rating: affirmed at '2' - USD1.5bn euro medium term note programme: affirmed at 'BBB-' - USD500m euro medium term notes under EMTN programme: affirmed at 'BBB-' Contact: Primary Analyst Ambreesh Srivastava Senior Director +65 67967218 Fitch Ratings Singapore PTE Ltd 6 Temasek Boulevard #35-5 Suntec Tower Four Singapore 038986 Secondary Analyst Julita Wikana Director +62 21 2902 6405 Committee Chairperson Jonathan Lee Senior Director +886 2 8175 7601 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable criteria, "Global Financial Institutions Rating Criteria", dated 15 August 2012, are available at www.fitchratings.com. Applicable Criteria and Related Research Global Financial Institutions Rating Criteria here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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