JAKARTA (Reuters) – Standard & Poor’s Global Ratings highlighted on Tuesday a deterioration in the balance sheets at Indonesian state-owned enterprises (SOEs) involved in a government-led infrastructure push in Southeast Asia’s biggest economy.
SOEs, especially those working in power and construction, have extensively borrowed in order to match the government development plans, causing their balance sheets to become “substantially weakened,” Xavier Jean, an analysts with S&P told reporters on Tuesday.
Level - SOEs - Average - Times - Times
The leveraging level of 20 listed and rated SOEs has increased to around an average of 5 times debt-to-EBITDA, jumping from 1 times in 2011.
“This is a trend that we are keeping a close eye on because we think it’s going to persist, and going to accentuate in 2018 and to the run up to the 2019 election,” Jean said.
Infrastructure - Development - Part - President - Joko
Infrastructure development is a core part of President Joko Widodo’s economic agenda and is aimed at slashing high logistics costs, which are often blamed for creating bottlenecks in the economy.
S&P upgraded Indonesia’s sovereign rating to investment grade in May, years after Fitch and Moody’s, on the back of structural improvements and reduced risks to the country’s fiscal position.
Government - Total - Infrastructure - Investment
The government estimates a total of $450 billion in infrastructure investment is needed between 2014 to 2019, which can only be partially...
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