Indonesia

Foreign investors are unlikely to rush back into Indonesian markets until either it pays more for its debt or gives hard evidence it will not push the central bank into longer-term monetary financing of public borrowing, fund managers say, Reuters reported. External demand for government debt in Southeast Asia’s largest economy, normally prized for 7% yields that are increasingly rare even in the world’s emerging markets, has slumped since March with foreign holdings hitting a decade-low in August.

Fitch Ratings has downgraded Indonesia-based developer PT Modernland Realty Tbk's (MDLN) Long-Term Issuer Default Rating (IDR) to 'C' from 'CC,’ Fitch Ratings reported. Fitch has also downgraded the rating on the USD150 million notes due 2021 and USD240 million notes due 2024 issued by its wholly owned subsidiaries, JGC Ventures Pte. Ltd. and Modernland Overseas Pte Ltd, respectively, and guaranteed by MDLN, to 'C' from 'CC'. The Recovery Rating on the notes remains at 'RR4'.

Indonesia’s second-largest lender by assets says the nation’s companies are set to demand more loans, as they scoop up assets made cheaper by the pandemic, Bloomberg News reported. Some buyers are interested in assets that have become available after the virus and measures to stem it hurt Indonesia’s economy, Alexandra Askandar, corporate banking director at PT Bank Mandiri, said in an interview last week. Growth in loans to large businesses will likely accelerate in the second half from an expansion of 3.4% in the first six months, she said, declining to give an exact target.

Indonesia’s flag carrier needs cash fast as losses soar past a half-billion dollars and unpaid bills pile up, yet negotiations for government aid move slowly and still may not yield enough to cover the shortfall, Bloomberg News reported. A first-half loss of $713 million, announced last week, was just the latest piece of bad news for PT Garuda Indonesia. The airline already missed a payment on an asset-backed security in late July, shortly after extending the repayment of a $500 million sukuk -- an Islamic bond -- by three years because of its cash crunch.

Bank Indonesia’s unprecedented move to buy about $27 billion in bonds directly from the government may prove to be an exception rather than the norm in emerging markets, Bloomberg News reported. With the world economy in crisis and Modern Monetary Theory gaining attention, governments are being pressured to spend more and turn to their central banks to print money to foot the bill. But when it comes to scooping up that debt, most central banks are doing it in the secondary market. Three weeks on, currency and bond markets appear to have given Indonesia a pass on its direct financing foray.

Southeast Asian low-cost carriers, a key growth engine for planemakers and leasing companies for a decade before the pandemic, are faltering financially as demand plunges, raising questions over whether they can replace and double their fleets, the International New York Times reported on a Reuters story. Auditors for Malaysia's AirAsia Group Bhd and Vietnam's VietJet Aviation JSC are concerned about cashflows and funding, while Indonesia's Lion Air has put the brakes on a planned flotation.

Indonesia is emerging as the lone bright spot in South-East Asia’s syndicated loan market with a pipeline of around US$6bn of offshore loans primed for launch in the coming months, Reuters reported. Instant noodles manufacturer Indofood Sukses Makmur, state-owned electricity utility Perusahaan Listrik Negara, gold and copper miner Freeport Indonesia and Bank Rakyat Indonesia are among a number of top-tier borrowers that are eyeing offshore borrowings.

Indonesian companies from airlines to builders of luxury condominiums and cement makers are warning investors of plunging revenue and profit as the coronavirus pandemic ravages Southeast Asia’s largest economy, Bloomberg News reported. While national carrier PT Garuda Indonesia and PT AirAsia Indonesia are hit by a ban on domestic travel and large scale social distancing rules, property developers are reporting declines in their sales as buyers turn more cautious.

The worst crisis in more than two decades among Indonesia’s smaller companies will boost loan losses and curtail profit at the nation’s largest lender, according to PT Bank Rakyat Indonesia Finance Director Haru Koesmahargyo, Bloomberg News reported. Bank Rakyat expects more than 10 million customers in its core segment -- micro, small and medium enterprises -- to be affected by the Covid-19 outbreak, Koesmahargyo said.

Months of concern over rising Covid-19 infection levels may be secondary for investors in coming days as market-moving events and policy decisions take center stage, Bloomberg News reported. China’s annual National People’s Congress starting Friday will likely keep volatility suppressed for developing-nation currencies, despite the prospect of another flareup in tensions between Beijing and Washington.