Indonesia must wait for Korea debt plan-US experts
By George Lerner
NEW YORK, Jan 26 (Reuters) - Indonesia will be hard pressed to embark on
a major debt restructuring before South Korea comes to terms with
international bankers, and any solution to Jakarta's debt crisis will
probably not involve a massive debt issue, U.S. analysts said on Monday.
''Korea has to get done before Indonesia does,'' said one Wall Street
analyst who asked not to be identified. ''I'd be very leery of any quick
fixes for the (Indonesia) situation.''
Indonesia's corporate debt has been estimated at $66 billion and the
rupiah's collapse of recent months has left most companies unable to pay
their debts.
Banking sources in Asia said Indonesia's government was in talks with
foreign bankers to resolve the issue but it seemed unlikely that any
solution was near given the magnitude of the problem and an apparent
lack of political commitment.
U.S. investment bank Morgan Stanley on Monday denied a newspaper report
that tied it to a proposed $10 billion sovereign bond deal that would be
used to assume Indonesia's short-term corporate debt. Morgan Stanley
acknowledged speaking to the Indonesians but denied making such a
proposal.
U.S. analysts said the idea of a large bond issue for Indonesia was
presently unfeasible and brougbrought unsavory memories of a plan Korea
had spu
''It sounds like a weird echo of the JP Morgan proposal for Korea,'' one
U.S. portfolio manager said. ''It doesn't yet have the ring of truth
about it because there's too little in the way of necessary other
structure (to the deal). It sounds too big, it sounds too public.''
International capital markets, wracked by months of instability out of
Asia, would not easily absorb a massive amount of Indonesian paper,
analysts said.
Jakarta's prospects for restructuring its mountain of corporate debt
seemed dependent on Seoul's capacity to reach a refinancing accord with
international bankers currently meeting in New York.
South Korean officials on Monday were closing in on a deal to exchange
some $30 billion in short term debt due this year for longer dated paper
over a three-year horizon. Earlier, Seoul had rejected a JP Morgan
proposal for a single massive debt issue to resolve Korea's liquidity
troubles.
Some analysts pointed to comments by William McDonough, president of the
Federal Reserve Bank of New York, that the Korean refinancing would
serve as a model for other troubled countries.
''We're probably going to establish a precedent and then that precedent
is going to be reapplied in other situations,'' said one U.S. portfolio
manager. ''I would be surprised if a new mold would be attempted to be
reinvented when the last one is not out of the oven and is not broken.''
Indonesian financial markets held steady Monday. The rupiah held at
about 14,000 to the dollar in late trade, slightly stronger than last
week but down more than 50 percent from January 1 and 80 percent lower
than six months ago. |
