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Fitch Affirms Penjaminan Infrastruktur Indonesia (IIGF) at 'BBB-'; Outlook Stable
August 27, 2014 / 1:36 PM / 3 years ago

Fitch Affirms Penjaminan Infrastruktur Indonesia (IIGF) at 'BBB-'; Outlook Stable

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(The following statement was released by the rating agency) BARCELONA, August 27 (Fitch) Fitch Ratings has affirmed PT Penjaminan Infrastruktur Indonesia's (Persero) Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'BBB-' and Short-Term Foreign Currency IDR at 'F3'. The Outlook is Stable. The company is also known by its English name, Indonesia Infrastructure Guarantee Fund (IIGF). KEY RATING DRIVERS The ratings reflect Fitch's expectation of extraordinary support from the Indonesian government (BBB-/Stable) if needed, based on its 100% state ownership and IIGF's important policy role in infrastructure development in Indonesia. IIGF was created to issue guarantees against political risk inherent in public-private partnership (PPP) infrastructure projects. IIGF serves as the government's sole representative for appraising infrastructure projects, structuring guarantees and processing claims. The sectors eligible for guarantee are power, water, roads and toll roads, transportation, sewerage and solid waste, irrigation, telecommunications, and oil and gas. Fitch believes IIGF's guarantees can help to grow PPP infrastructure projects throughout Indonesia, making the company strategically important to the country. Given the lengthy time it takes for a PPP project to be executed, the scope of IIGF operations so far has been limited. IIGF's main revenue source at the moment is the return on its investments from its sizeable liquidity. IIGF projects guarantee exposure to increase to IDR14trn (USD1.2bn) by 2016 from no guarantees issued at present. Given the nature of its activities, IIGF's main risks are the guarantees, which are off-balance sheet. Therefore all its liquidity is invested in either short-term securities or bank deposits. If it requires cash-flow assistance to meet any called guarantees, IIGF can obtain a short-term facility from a bank as well as approach the Ministry of Finance to inject additional capital. IIGF was established by the government of Indonesia in 2009 and is regulated and supervised by the Ministry of Finance. RATING SENSITIVITIES An upgrade of Indonesia's sovereign rating, with continued strong implicit support, would trigger a rating upgrade as IIGF is credit-linked to the sovereign. A downgrade of Indonesia's sovereign rating or negative changes to IIGF's status following a dilution of its legal status or control by the Ministry of Finance could trigger a rating downgrade. Contacts: Primary Analyst Fernando Mayorga Managing Director +34 93 323 8407 Fitch Ratings Espana, S.A.U. Paseo de Gracia, 85, Barcelona 08008 Secondary Analyst Terry Gao Director +852 2263 9972 Committee Chairperson Raffaele Carnevale Senior Director +39 02 87 90 87 203 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Tax-Supported Rating Criteria', dated 14 August 2012, and 'Rating of Public Sector Entities - Outside the United States', dated 04 March 2014, are available on www.fitchratings.com. Applicable Criteria and Related Research: Tax-Supported Rating Criteria here Rating of Public-Sector Entities - Outside the United States here Additional Disclosure Solicitation Status 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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