S&P Global Ratings on Thursday (Apr 28) revised up its ratings on 3 Indonesian companies - Pertamina, Perusahaan Listrik Negara (PLN) and Astra International - to "stable" from "negative", reflecting its new outlook on the sovereign rating on Indonesia.

The ratings agency had on Wednesday lifted its outlook for Indonesia’s credit ratings to "stable" from "negative", amid economic recovery from the pandemic, and better terms of trade in the country.

For Pertamina and PLN, S&P expects they will continue to play a critical role for the Indonesian government and in turn, benefit from ongoing government support. Pertamina is an Indonesian state-owned oil and natural gas corporation; PLN is a state-owned electricity distribution company.

Similarly, S&P revised up Astra, noting that its "BBB+" foreign-currency rating and "A-" local-currency rating are above the sovereign rating due to the company's low leverage and strong cash flow.

A unit of the Jardine Group, Astra is an Indonesian conglomerate with business interests in distributing cars, coal mining and operating oil-palm plantations.

S&P noted it has a standalone credit profile on Astra at "A-", and expects that the company will very likely be given financial support from Jardine Group during severe sovereign stress. S&P also said that the company has the financial flexibility to withstand a significant period of sovereign stress and should still have enough liquidity to honour all its obligations in a timely manner.

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In 2020, the ratings agency placed Indonesia on a negative outlook, which foreshadowed a possible downgrading of the country’s ratings, due to risks from its strong counter-cyclical fiscal measures.

Indonesia’s economic outlook has improved since then, with the country’s gross domestic product expected to grow 5.1 per cent in 2022, versus its growth rate of 3.7 per cent last year, 2021 S&P said.