OREANDA-NEWS. Fitch Ratings has affirmed Lembaga Pembiayaan Ekspor Indonesia's (Indoexim) Long-Term Issuer Default Rating (IDR) at 'BBB-' with Stable Outlook. A full list of ratings is provided at the end of this commentary.

KEY RATING DRIVERS - IDRs, Support Rating and Support Rating Floor

Indoexim's IDRs, Support Rating (SR) and Support Rating Floor (SRF) reflect the state's continuing propensity to extend Indoexim extraordinary support, if needed. Indoexim's credit profile benefits from a high probability of extraordinary state support, if needed, given that it is 100% owned by the state and it plays an important policy role in supporting and develop the country's export industry, an area of strategic importance to Indonesian's economic development. The sovereign is likely to have the ability to support Indoexim in times of need given Indoexim's modest size in proportion to the domestic banking sector and Indonesian's GDP . The Stable Outlook reflects that of the Indonesian sovereign (BBB-/Stable). No Viability Rating is assigned as it is less meaningful to analytically assess such a policy-related institution on a standalone basis.

The government has a history of providing support to Indoexim, including through several capital injections, such as a IDR2trn injection in 2010 and IDR1trn in 2014. The government has announced plans to provide another IDR1trn in 2015. The government has committed to maintain Indoexim's capital at a minimum of IDR4trn and to distribute a maximum of 10% of its surplus as dividends and employee compensation, as stipulated in the Special Act 2/2009 to support the bank's policy role. Indoexim's funding facility from the Ministry of Finance and its quasi-sovereign status provide it with funding flexibility and greatly mitigate funding risk during volatile market conditions.

RATING SENSITIVITIES - IDR, Support Rating and Support Rating Floor

Indoexim's ratings are equalised with Indonesia's sovereign ratings. The rating would be directly affected by changes to the sovereign rating. Any perceived weakening in the government's propensity to provide extraordinary support to Indoexim could also result in downward rating pressures, although Fitch believes this to be unlikely in the medium term.

RATING DRIVERS AND SENSITIVITIES - Debt Rating

Indoexim's euro medium-term notes (EMTN) are rated as the same level as Indoexim's IDR in accordance with Fitch criteria. Any changes in Indoexim's IDR would affect the issue rating.

The full list of rating actions follows:
- Long-Term IDR affirmed at 'BBB-'; Stable Outlook
- Short-Term IDR affirmed at 'F3'
- Support Rating Floor affirmed at 'BBB-'
- Support Rating affirmed at '2'
- USD1.5bn EMTN programme affirmed at 'BBB-'
- USD500m euro medium term notes under EMTN programme affirmed at 'BBB-'