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JAKARTA: US ratings agency Standard and Poor's said on Tuesday it had lowered Indonesia's long-term foreign currency sovereign credit rating to "Selective Default" from Triple C-Plus.

But the New York-based agency said the country's B-minus long-term local currency issuer credit rating was unaffected.

"The SD (selective default) long-term foreign currency issuer credit ratings reflects Indonesia's distressed rescheduling of 210 million dollars worth of principal on a 350 million dollar commercial loan," the agency said.

The rescheduling was agreed Sunday on the commercial loan disbursed in 1994 by a syndicate of 70 banks led by Japan's giant Bank of Tokyo-Mitsubishi Ltd., it said.

The brand-new SD rating applies when a country has selectively defaulted on an issue or class of obligations but will continue to make timely payments on its other obligations.

"Such circumstances increasingly characterise defaults of sovereign governments and other obligors in emerging markets," Standard and Poor's said in an explanatory note on the rating.

But the agency said Indonesia's senior unsecured ratings on a 400 million dollars Yankee bond due in August 2006 and a 300 million dollar Euro floating rate note (FRN) due February 2001 were affirmed at Triple-C-Plus.

The agency said that the rescheduling of Tokyo Mitsubishi syndicated loan on Sunday completed Indonesia's compliance with its Paris Club agreement signed last September.

Under the agreement, all 4.2 billion dollars of principal repayment to Paris Club bilateral creditors due between August 6, 1998 and March 3, 2001 were restructured.

The Paris Club rescheduling is conditional on comparable rescheduling of all commercial loans coming due during the consolidation period.

"Given Indonesia's amortization profile, the restructured 1994 syndicated loan is the only sovereign obligation captured by the burden-sharing stipulation," Standard and Poor's said.

The fact that neither the Yankee bond nor the Euro FRN came due in the consolidation period underscored "the likelihood that Indonesia's 426 million dollars worth of rated debt will remain unaffected by the ongoing rescheduling effort, as will sovereign local currency obligations."

"The long-term foreign currency issuer credit rating will remain at SD pending a review of the documentation on the rescheduled loan," it said, adding that after the review it will be "reset to a forward-looking assessment of the sovereign's general credit rating."

Standard and Poor's Triple-C-rating denotes a situation in which a country is "currently vulnerable to non-payment" and is dependent on economic conditions to repay debt, while "B" ratings have significant speculative characteristics.ÑAFP�
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