BCAS: S&P Affirms BBB/A-2, Outlook Stable — Better Than Feared, Not Yet a Green Light

- S&P kept Indonesia at BBB/A-2, outlook stable — a cleaner outcome than the market was positioned for, given the tape we have had YTD. Growth is still seen at 5.1%, and S&P expects the fiscal deficit to be held below 3.0% of GDP, supported by 21% yoy revenue growth in H1 — even with MBG trimmed by roughly a third to make the arithmetic work.

- The number that matters is interest payments as a share of revenue, which S&P sees staying above the 15% threshold through 2027 before easing. That is the pressure point. S&P is explicit: if it sticks there structurally, or if the CAD (widening to 2.1% of GDP this year) keeps deteriorating, the downgrade conversation opens. For now the agency reads the weakness as temporary and reversible on firmer commodities and more predictable policy.

- S&P also framed Danantara Sumberdaya Indonesia (DSI) as constructive — underinvoicing/transfer pricing enforcement and centralised resource management as a medium-term revenue and export-earnings lever.

Our view:

1. Positive above expectation. Affirmation removes a tail risk that was quietly being priced. Indonesia's 10Y at a wide spread to BBB peers if the spread compresses even partially, bond inflows are the first-order trade, and IDR follows. Equities are the second derivative, not the first.

2. But we stay cautious, and the reasons have not changed:

- MSCI remains the structural drag. The criterion-level downgrade and weight collapse (1.16% → 0.45%) is a passive-flow problem that a rating affirmation does not fix. Foreign positioning does not rebuild on an S&P press release.

- Policy predictability is still the open question. S&P's constructive read on DSI's one-door export policy is, frankly, a surprising take — the execution risk is real and the agency is granting benefit of the doubt earlier than we would.

- S&P has told us what breaks the rating. Interest/revenue above 15% through 2027 and a structurally widening CAD are the two tripwires. Both are live.

Positioning: Constructive on duration and IDR-sensitive names into any spread compression. On equities — this is a reason to stop de-risking, not yet a reason to add aggressively. Stay selective: commodities/gold where the earnings are real, quality banks where the LDR math still works. We would want to see foreign flow confirm before turning outright bullish.

Rating stable. Story not yet resolved.

US Tightened Iran Blockade, Sending Oil Prices Above USD 85/bbl

Brent crude rose above USD 85/bbl, while WTI approached USD 80/bbl, after US President Donald Trump reimposed a naval blockade on Iranian shipments through the Strait of Hormuz and proposed a 20% transit fee on cargoes using the waterway. The US also launched a third consecutive night of strikes against Iran, raising concerns over oil supply disruptions from the Persian Gulf. The escalation lifted oil prices to their highest level in nearly a month after they had fallen around 30% during 2Q26. (Bloomberg)

Indonesia Introduced Special Diesel Price for Commercial Fishing Vessels

The govt. introduced a special diesel price of IDR 15,000/liter for commercial fishing vessels with capacities of 30–200 GT, following a directive from President Prabowo. The price support will be financed by the Palm Oil Plantation Fund Management Agency (BPDP) instead of the state budget (APBN), with the aim of reducing operating costs and improving certainty for the fisheries sector. The govt. will coordinate with the Ministry of Marine Affairs and Fisheries to ensure targeted distribution and prevent misuse of the program. (CNBC Indonesia)

Mayora Indah (MYOR) Maintained Affordable Product Strategy Amid Weaker Consumer Spending

MYOR said softer consumer purchasing power has made consumers more price-sensitive, prompting the co. to focus on single-pack products priced at around IDR 1k–2k/unit. The co. also has no immediate plans to raise selling prices, supported by easing raw material costs, while continuing to strengthen promotions, distribution, and market penetration. MYOR expects commodity prices, particularly cocoa, to remain stable and anticipates an economic recovery in 2H26 to support consumer demand. (Kontan)

Research 1

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Bank Tabungan Negara

23 April 2025 - 04.41pm

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stocks

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