* Moody's changes outlook to 'positive' from 'stable'
* C.bank gov: This shows success of stability policies
* S&P has not awarded Indonesia investment grade rating
* Econ minister: S&P keeps changing its explanations
(Adds comments by officials, investor)
By Gayatri Suroyo
JAKARTA, Feb 9 Indonesian authorities welcomed a
credit outlook upgrade by Moody's as a sign investors are
increasingly comfortable with the country, while the chief
economics minister chastised Standard & Poor's for holding back
an investment-grade rating.
Moody's Investors Service upgraded its credit outlook on
Indonesia sovereign debt to "positive" from "stable" late on
Wednesday and reaffirmed its Baa3 ratings, the lowest notch for
investment grade debt.
The agency noted that Southeast Asia's largest economy is
now less vulnerable to external shocks and has a lengthening
track record of economic stability and fiscal discipline.
This followed a similar December move by Fitch, which has an
equivalent BBB- rating, and comes as Indonesia's policymakers
seek to attract more foreign investment when emerging market
assets globally are under stress.
Late last year, the government sanctioned JP Morgan Chase &
Co. for downgrading the country's equity market. Finance
Minister Sri Mulyani Indrawati said in January she was concerned
the downgrade could fuel a stampede out of the country's assets.
Bank Indonesia Governor Agus Martowardojo said the Moody's
upgraded outlook showed international recognition of the
country's "success in maintaining macroeconomic and financial
stability that create a conducive environment for sustainable
On Thursday, Indrawati said the government will continue to
strengthen policies to "rationalize risk perception".
Officials have long been hoping for a ratings upgrade from
Standard & Poor's, which has kept Indonesian debts at junk
status. Fitch Ratings gave Indonesia an investment grade ratings
in 2011 and Moody's in 2012.
But Darmin Nasution, the chief economics minister, said
investors should dismiss the fact S&P still has not given an
investment grade rating.
"We don't know what (S&P's) problem is. Its explanations
change all the time... If it keeps changing its mind, don't
listen to it," Nasution told reporters.
S&P declined to comment on the difference between its
assessment and that of its competitors.
In a report in January, S&P said that although the U.S.
November election caused some initial weakness in the rupiah,
investors have been buying Indonesian bonds.
"We continue to see this confidence as contingent upon
continued progress in reforms to foreign investment policy, fuel
subsidies and ease of doing business," S&P said.
Jean-Charles Sambor, deputy head of emerging market fixed
income at BNP Paribas Investment Partners in London, said "Among
the three agencies, S&P has been more conservative in its
assessment of Indonesia but we expect them to be the next one to
Moody's said key drivers of its change in outlook were
smaller current account deficit and higher foreign exchange
Indonesia's current account deficit in 2016's last quarter
was its smallest in five years, while foreign exchange reserves
at end-January were the highest since August 2011.
Challenges in revenue collection were highlighted by Moody's
as a risk. The rating agency also warned it could lower the
outlook if reform efforts unravel.
Moody's said it would upgrade Indonesia's ratings if the
government reduces reliance on external debt, while at the same
time strengthening its financial institutions.
On Thursday, Indonesian bonds rallied across the board both
in the local currency and dollar bond markets. The
rally saw yields falling 6-7 basis points in the rupiah
The Indonesian sovereign sector has been the
best performer in the JPMorgan Asia Credit Index in
2017 with a return of 4.01 percent.
(Additional reporting by Umesh Desai in Hong Kong; Editing by