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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: gianelda who wrote (522)	1/9/1998 3:52:00 PM
From: gianelda	Respond to of 18691

Moody's cuts Indonesia, South Korea ratings NEW YORK, Jan 9 (Reuters) - Moody's Investors Service on Friday cited increased pressure on Indonesian companies and banks and pointed to the rollover of South Korea bank obligations when it lowered the two countries' ratings. Moody's said it needed to cut South Korea's foreign currency bank deposit ceiling to Caa1 from B1 because of the forced rollover in late December of interbank credits. ''These rollovers are a default in the way we define it,'' said Vicent Truglia, managing director at Moody's. ''The definition forces our hand.'' The ratings move also reflected concerns over Korea's currently fragile external payments position, coupled with adverse regional factors, which could prolong the forced rollover period, the agency said. But Moody's considered it highly likely the Korean debts would ultimately be repaid. ''There is probably going to be an extremely high recovery value of principal, but it's nonetheless defaulting,'' Truglia said. Moody's also said it may downgrade Korea's Ba1 foreign currency ceiling for bonds, but noted that the country's problems were short-term in nature. ''The fundamentals remain good,'' Truglia said. ''If confidence returns you will probably see a move up in these ratings.'' Regarding Indonesia, Moody's downgraded the country's foreign-currency country ceiling for bonds and notes to B2 from Ba1 and its foreign-currency bank deposit ceiling to Caa1 from Ba3. The downgrades resulted from rising concerns over the economic consequences of continued volatility in Indonesian financial markets, the agency said. An economic contraction, sustained weakness in the country's currency and questions regarding presidential succession are affecting the banking and corporate sectors, Moody's said. The Indonesian corporations, in particularly, will likely be unable to repay a considerable portion of the large external debt on a timely basis. ''You're going to be getting increasing defaults by Indonesian corporates,'' Truglia said. ''As a result, you've got to have increasing pressuring on nonperforming assets in the banking system, and that's going to add pressure on the ability of banks to finance themselves.