TEXT-S&P rates Indonesia's proposed 30-Yr Global Bond 'BB+'

(The following was released by the rating agency)

Jan. 9 - Standard & Poor's Ratings Services today assigned its 'BB+' long-term foreign currency debt rating to a proposed U.S.-dollar-denominated benchmark-size global senior unsecured bond issue by the Republic of Indonesia. The bonds, which mature in 2042, form part of the country's US$15 billion global medium-term notes (MTN) program, which was increased from US$9 billion last year.

The bond will constitute the direct, unconditional, and unsecured obligations of the sovereign, and will rank equal with other unsecured and unsubordinated external debt of Indonesia.

The sovereign credit rating on Indonesia (BB+/Positive/B; ASEAN scale axBBB+/axA-2) reflects continuing improvements in the government's balance sheet and external liquidity, a resilient economic performance, and cautious fiscal management. Rating constraints include Indonesia's low per capita income, structural and institutional impediments to higher economic growth, and relatively high and volatile inflation. In addition, the country remains vulnerable to external shocks, partly on account of its shallow domestic capital markets, although the recent introduction of the bond stabilization framework moderated this risk somewhat.

We may raise the sovereign ratings if reforms such as subsidy rationalization suggest that fiscal and external vulnerabilities are further reduced, the external debt burden declines, or the sovereign's balance sheet improves. Conversely, stalling reforms or the absence of timely and adequate policy responses to renewed fiscal or external pressures would result in the ratings stabilizing or weakening.

RELATED CRITERIA AND RESEARCH

-- Sovereign Government Rating Methodology And Assumptions, June 30, 2011

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.

Primary Credit Analyst: Agost Benard, Singapore (65) 6239-6347; agost_benard@standardandpoors.com

Secondary Contact: Elena Okorotchenko, Singapore (65) 6239-6375; elena_okorotchenko@standardandpoors.com