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Jakarta, 27 May 2017  

Bahasa: Indonesia

 
 
 
Rating Services
Although ICRA Indonesia is the latest entrant in the Credit Rating business, ICRA Indonesia's resources have long experience in cooperation and partnership with other international rating agencies, enabling us to offer clients a full range of ratings services incorporating both domestic and international perspectives.

ICRA Indonesia provides comprehensive rating services on Corporates, Banks and Financial Institutions, Claim Paying Abilities andDebt Instruments detailed in the Credit Rating section.
 
Credit Rating
An ICRA Indonesia Rating is a symbolic indicator of ICRA Indonesia’s current opinion on the relative capability of the corporate entity concerned to timely service debts and obligations, with reference to the instrument rated.  The rating is based on an objective analysis of the information and clarifications obtained from the entity, as also other sources considered reliable by ICRA Indonesia.  The independence and professional approach of ICRA Indonesia ensure reliable, consistent and unbiased ratings.  Ratings allow investors to factor credit risk in their investment decision.  ICRA Indonesia rates long-term, medium-term, and short-term debt instruments.  ICRA Indonesia offers its Credit Rating services to a wide range of issuers including:
  • Manufacturing companies
  • Banks and financial institutions
  • Infrastructure sector companies
  • Service companies
  • Municipal and other local bodies
  • Non-banking finance companies
  • Small and medium sector entities
  • Asset backed securities
Rating Process
ICRA Indonesia's Rating Process is initiated on receipt of the signed Agreement from the issuer. A Rating Team, which consists of two analysts with the expertise and skills required to evaluate the business of the issuer, is involved with the rating assignment. An issuer is provided a list of information requirements and the broad framework for discussions. These requirements are worked out on the basis of ICRA Indonesia's understanding of the issuer's business, and broadly cover all aspects that may have a bearing on the rating. ICRA Indonesia also draws on secondary sources of information, including its own Research Division, while working on the rating assignment. The rating involves assessment of a number of qualitative factors with a view to estimating the future earnings of the issuer. This requires extensive interactions with the issuer's management, specifically on subjects relating to plans, outlook, competitive position, and funding policies.

After completing the analysis, a Rating Report is prepared, which is then presented to the ICRA Indonesia Rating Committee. A presentation on the issuer's business and management is also made by the Rating Team. The Rating Committee is the final authority for assigning ratings. The assigned rating, along with the key issues, is communicated to the issuer's top management for acceptance. Non-accepated ratings are not disclosed and complete confidentiality is maintained on them.

If the issuer does not find the rating acceptable, it has a right to appeal for a review. Such reviews are usually taken up if the issuer provides certain fresh inputs. During a review, the issuer's response is presented to the Rating Committee. If the inputs and/or fresh clarifications so warrant, the Rating Committee would revise the initial rating decision.

As part of a mandatory surveillance process, ICRA Indonesia monitors all accepted ratings over the tenure of the rated instruments. The ratings are generally reviewed once every year, unless the circumstances of the case warrant an earlier review. The rating outstanding may be retained or revised (that is, upgraded or downgraded) on surveillance.

Methodology
ICRA Indonesia considers all relevant factors that have a bearing on the future cash generation of the issuer. These factors include: industry characteristics, competitive position of the issuer, operational efficienty, management quality, commitment to new projects and other associate companies, and funding policies of the issuer. A detailed analysis of the past financial statements is made to assess performance under "real world" business dynamics. Estimates of future earnings under various sensitivity scenarioes are drawns up and evaluated against the claims and obligations that require servicing over the tenure of the instrument being rated. Primarily, it is the relative comfort level on the issuer's cash flows to service obligations that determines the ratings.
 
Research and Publications
With the Indonesian economy undergoing fundamental changes, ICRA Indonesia has built up a research programme to analyse contemporary developments that influence the Indonesian money and finance world. ICRA Indonesia's research and publication include press release, rating rationale, industry review, specific comments, economic updates, methodology and default study.
 
Rating Requirements
  • Articles of Associations of the company and subsequent amendments;
  • Audited financial reports for the previous three - five years;
  • Cost structure segmented by products;
  • Debt structure and list of borrowed funds or other liabilities, including projected interest and principal payments;
  • Projected financial statements over the next three-five years, or for the life of rated long-term debt issue;
  • Business plan, incorporating the 3-5 year projected financial statements;
  • Information memorandum with respect to the issuance of securities, or of securities currently being applied for;
  • Information about third-party guarantors or bank guarantees, if any;
  • List of shareholders over the last five years who have owned at least 5% of the company;
  • Curriculum Vitae of directors, commissioners and other key personnel in the company;
  • Organizational structure and a brief description of the key personnel in the company;
  • Information about the type of business the company engages in, and its share;
  • Information about the group, holding company, subsidiaries and affiliated companies.



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