TEXT-Fitch Rates Bank Tabungan Negara's Bonds 'AA(idn)'

Mon Feb 18, 2013 12:19am EST

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(The following was released by the rating agency)

JAKARTA/SEOUL/SINGAPORE, February 18 (Fitch) Fitch Ratings has assigned Indonesia-based PT Bank Tabungan Negara (Persero) TBK's (BTN) proposed IDR2trn bonds with a maturity of 10 years a National Long-Term 'AA(idn)' rating. This is the second bond to be issued under BTN's IDR4trn bond programme and the proceeds will be used for business expansion.

Rating Action Rationale

The senior bonds are rated the same level as BTN's National Long-Term rating and its bond programme's rating of 'AA(idn)', as they reflect direct, unconditional, unsecured and unsubordinated obligations of the bank.

BTN's ratings reflect likely continuing state support in times of need. This is due to the government's majority ownership, as well as the bank's systemic importance to the domestic economy and its policy role in providing subsidised financing for low-cost housing in support of the government's housing programme.

Rating Drivers and Sensitivities

Increased systemic importance may benefit the bank's rating although this is unlikely given that BTN is much smaller than Indonesia's other three state-owned banks by total assets. Negative rating action would likely arise if the propensity of state support for BTN is to weaken, due to a reduced systemic importance or waning significance of its mandate in the domestic home-loan market.

BTN is Indonesia's 10th-largest bank in Indonesia and its largest mortgage provider.

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