Indonesia Credit Rating Lifted to Investment Grade by S&P

Indonesia’s credit rating has been brought to investment grade. Its creditworthiness is now in line with the other two main rating companies, thus paving the way for more fund inflows into Southeast Asia’s largest economy. Stocks surged to a record and the rupiah advanced.

The sovereign rating was lifted to BBB- from BB+ with a stable outlook, S&P said on Friday, citing an improvement in the budget.

Moody’s Investors Service and Fitch Ratings have a positive outlook on their assessments of the nation’s debt.

“The government’s new focus on realistic budgeting has lowered the risks that budget deficits will widen significantly when government revenue disappoints,” S&P said. The upgrade reflects “our assessment of reduced risks to Indonesia’s fiscal metrics,” it said.

The trend will boost the appeal of Indonesian assets among conservative Japanese institutional investors and help attract as much as $5 billion in funds, Goldman Sachs Group Inc. said in March.

Moreover, the Jakarta Composite Index jumped as much as 3.2 percent to a record 5,825.2, extending gains this year to almost 10 percent. The rupiah rose as much as 0.3 percent, paring losses of as much as 0.5 percent earlier and taking gains this year to 1 percent.

Read more at Bloomberg.