'Most firms able to withstand prolonged rupiah fall'
JAKARTA: Most Indonesian companies rated by Standard & Poor's Ratings Services have sufficient buffers in their balance sheets to withstand a prolonged fall in the rupiah, the ratings agency said in a report on Wednesday.
"About 80 per cent of rated Indonesian companies still have adequate headroom under our rating downgrade trigger if the rupiah were to stay at about 12,000 per US dollar for a year, assuming all other factors remain the same," said Standard & Poor's credit analyst Mehul Sukkawala on Wednesday.
The rupiah strengthened 0.2 percent to trade at 11,568 against the greenback on Wednesday, according to Bank Indonesia's median rate.
The currency has declined 20 percent so far this year, on the back of weak commodities exports, surging fuel and capital good imports, and capital outflows on potentially tighter United States monetary policy.
The report, titled "Most Rated Indonesian Corporates Can Cope With A Weaker Rupiah", highlights Indonesian firms with large US-dollar debts but earning in rupiah, as those that would face the biggest impact from the rupiah's recent fall.
"Certain sectors, such as the media, telecommunications, capital goods manufacturing and agribusiness industries have greater currency mismatch and are likely to suffer most," Sukkawala said in the report.
"On the other hand, we expect the domestic retailing, mining, and utilities sectors to see relatively less stress, given their small currency mismatch between revenues and debt servicing."
Among the rated local firms are MNC Sky Vision, Indosat, Bumi Resources, Bank Danamon Indonesia, and Modernland Realty.