So President Susilo Bambang Yudhoyono of Indonesia on the campaign trails does not mention anything about the problems of trade stangnation, diminished trade relations with the rest of Asia, the fact that their natural gas resource which has been holding the GDP up, is depleting, what does he talk about? His new album!
Apparently he’s hoping that his collection of love ballads will beat out the love ballads of his rival, Army Chief Wiranto.
Indonesia has several investment grade whole loans that came out this year. Companies to look at include
Indorama international (Textile)
PT Ultrajaya Milk Industry and Trading Co (Food & Beverage)
PT Austindo Nusantara (Mining)
I am interested in how PT Bakrie Telecom will fare in the future. They took out a fairly high leveraged loan in July (5 year tenor). Sales are down 7% though.
I’m still a fan of telecom in the emerging markets. Aside from possible nationalizing or tanks rolling over them, there is little political risk that would result under civil unrest – people still need to call each other right?
According to the IMF, the problem with Indonesia is that it hasn’t really found a way to increase market share in the export market. Indonesia has an open trade policy with little or no tarrifs making it a relatively open economy. Yet it seems to have it’s focus in the wrong place. It is currently over trading with Latin America, the Middle East, and Africa. It is under-trading with the US, EU, and the rest of Asia.
As it stands now, it may be worth getting into these short term corporates that are paying extremely high yields in Indonesia. I certainly would not want to invest in the sovereign paper nor it’s equities unless you really know where to look. The macro fundamentals in Indonesia do not seem poised for growth unless its leaders push for increased trade with China, EU and the US. Currently it’s Debt/GDP is on par with Argentina, and we already been down that road.
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