Commodity exporters face rising credit risk under centralized policy, Fitch warns - Companies - The Jakarta Post

Companies

The government's plan to task newly formed DSI with managing strategic commodity exports could spell increased credit risk for producers, though more robust or diversified companies are likely to better weather the policy shift, says a June 12 report from Fitch Ratings.

Heavy equipment operate on March 4, 2011, at the Binungan coal mine belonging to PT Berau Coal in Berau regency, East Kalimantan. (JP/Indra Harsaputra)

Local commodity exporters are facing heightened credit risk as new regulations mandate single-door export arrangements through state-owned PT Danantara Sumberdaya Indonesia (DSI), a subsidiary of state asset fund Danantara, according to a Fitch Ratings report published on Friday.The new rules could erode issuers’ pricing flexibility and control over export proceeds, the global credit rating agency stated, though the impact was likely to be more manageable for companies with robust balance sheets or diversified operations.

The policy’s details remain uncertain, however, while its implementation approach and design would affect the credit profiles of mining and plantation businesses.