Fitch Affirms Credit Guarantee and Investment Facility's IFS Rating of 'AAA(idn)'

(The following statement was released by the rating agency)


Fitch Ratings-Jakarta-June 18: Fitch Ratings Indonesia has affirmed Credit
Guarantee and Investment Facility's (CGIF) National Insurer Financial Strength
(IFS) and National Long-Term Ratings at 'AAA(idn)'. The Outlook is Stable.

'AAA(idn)' Long-Term National Ratings denote the highest ratings assigned by
Fitch on its national rating scale for that country. This rating is assigned to
issuers or obligations with the lowest expectation of default risk relative to
all other issuers or obligations in the same country.

Fitch believes CGIF's credit profile is stronger than Indonesia's Long-Term
Local-Currency Issuer Default Rating of 'BBB', which supports the assignment of
a 'AAA(idn)' IFS Rating on the national scale.

KEY RATING DRIVERS

CGIF's ratings consider its very strong capitalisation, prudent investment
composition, use of reinsurance to support its underwriting capacity and
improving operating profitability.

CGIF benefits from its operational linkage to the Asian Development Bank (AsDB,
AAA/Stable) and shares AsDB's multilateral supranational status. CGIF continues
to cautiously manage its guarantee operation by adopting, when appropriate,
AsDB's operational policies and risk-management framework.

CGIF's capitalisation, as measured by after-reinsurance notional insured
par/capital, remained manageable at 1.11x at end-2018, despite ongoing expansion
of its bond guarantee business and several transactions still in the pipeline.
The company entered into a quota share reinsurance treaty to underpin its
underwriting capacity. Premiums are ceded to a panel of reinsurers with strong
credit quality. Fitch expects CGIF to keep its after-reinsurance notional
insured par/capital leverage below 2x as its portfolio expands.

CGIF's investment composition remains conservative, as it invests only in cash,
deposits and fixed-income securities with strong credit quality. The company has
no exposure to equity or property investments. Eligible fixed-income securities
with maturity terms of more than one year must be rated at least 'A+' for
government-related entities of CGIF contributor countries and 'AA-' for others
on an international scale.

Fitch expects CGIF's continued business expansion to steadily improve its
operating profitability as the share of fixed costs will decline. CGIF's net
profit rose by around 56% in 2018 to USD16.9 million, while its return on equity
rose to 2.0% in 2018, from 1.5% in 2017.

Offsetting this is CGIF's limited operating history and business focus on a
high-risk-insured portfolio. CGIF provides guarantees on local-currency
denominated bonds issued by corporations in south-east Asia, exposing it to
issuers with non-investment-grade ratings and uncapped currency risks.

CGIF was established in 2010 to support the development of debt capital markets
in Asia by providing financial guarantees on debt issues, primarily corporate
issuers. It started operations in 2012 and wrote its first bond guarantee in
2013.

RATING SENSITIVITIES

Downgrade rating sensitivities include:

- An upsurge in the after-reinsurance notional insured par/capital leverage
ratio to consistently higher than 3x, or

- Losses developing in the guarantee portfolio that adversely deviate from the
company's expectation, or

- Increased reliance on reinsurance protection with a reduction in the net per
gross notional par insured ratio to below 75%, or

- CGIF's capital providers fail to pre-fund business growth with capital
injections, and instead allow the leverage ratio to (even temporarily) exceed
targets.

CGIF's National IFS and National Long-Term Ratings are already at the highest
possible level and cannot be upgraded.

Contacts:

Primary Analyst

Jessica Pratiwi

Analyst

+62 21 2988 6816

PT Fitch Ratings Indonesia

DBS Bank Tower 24th Floor Suite 2403

Jl. Prof. Dr. Satrio Kav 3-5

Jakarta, Indonesia 12940

Committee Chairperson

Siew Wai Wan

Senior Director

+65 6796 7217

Note to Editors: Fitch's National ratings provide a relative measure of
creditworthiness for

rated entities in countries with relatively low international sovereign ratings
and where there is

demand for such ratings. The best risk within a country is rated 'AAA' and other
credits are

rated only relative to this risk. National ratings are designed for use mainly
by local investors

in local markets and are signified by the addition of an identifier for the
country concerned,

such as 'AAA(idn)' for National ratings in Indonesia. Specific letter grades are
not therefore

internationally comparable.

Media Relations: Peter Hoflich, Singapore, Tel: +65 6796 7229, Email:
peter.hoflich@thefitchgroup.com; Leslie Tan, Singapore, Tel: +65 6796 7234,
Email: leslie.tan@thefitchgroup.com.

Additional information is available on www.fitchratings.com

Applicable Criteria

Insurance Rating Criteria (pub. 11 Jan 2019)

https://www.fitchratings.com/site/re/10058790

National Scale Ratings Criteria (pub. 18 Jul 2018)

https://www.fitchratings.com/site/re/10038626

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/site/pr/10078914#solicitation

Endorsement Policy

https://www.fitchratings.com/regulatory

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