Singapore, November 20, 2013 -- Moody's Investors Service says the credit 
profiles of Indonesian property developers rated by Moody's will remain 
stable into 2014, despite multiple headwinds.

"Indonesian property developers that we rate will maintain stable credit 
positions over the next 6-12 months, despite the multiple headwinds that 
they face, including a challenging macroeconomic environment, regulatory 
changes to mortgage disbursement rules implemented in September, and a 
weakening rupiah," says Jacintha Poh, a Moody's Analyst.

"In addition, while we expect the increase in property prices to 
moderate, demand for housing in the Greater Jakarta region will not fall 
significantly, given Indonesia's growing population and urbanization,"
adds Poh.

"Moreover, the take-up rate for new residential launches by property 
developers that we rate should be in excess of 50%, because of their 
ability to keep supply roughly in line with demand, by launching 
residential projects in phases. This approach allows the developers to 
avoid an oversupply situation and to maintain pricing power."

Moody's analysis is contained in its just-released report titled "Credit 
Profiles of Indonesian Developers Are Resilient Against Headwinds," and 
is co-authored by Poh, and George Teng, an Associate Analyst.

According to Moody's report, Indonesian property developers will face a 
tougher operating environment in 2014, as a result of a slowing economy, 
the prospect of tighter monetary policy and uncertainties resulting from
the upcoming general elections in May, which in turn will dampen demand 
for residential property.

On changes in regulations, Moody's report says developers will receive 
lower upfront cash receipts for residential sales due to changes in rules 
governing the disbursement of mortgage payments. The new rules will 
constrain the developers' cash flows and hamper expansionary activity, 
but developers rated by Moody's should comfortably finance their working 
capital needs, given their large profit margins of over 40% and their 
high percentage of customers opting for cash or cash instalments as 
opposed to taking up a mortgage.

In addition, people who are not first home buyers and who are seeking to 
buy residential properties that are larger than 70 square metres, will be 
required to pay higher downpayments. The minimum downpayment has been 
raised to 40% from 30% for second properties and to 50% for subsequent
properties. Banks are also prohibited from providing consumer loans for 
the purpose of downpayments.

Moody's report points out that the change in downpayment rules -- aimed 
at curbing excessive loan growth for banks -- will dampen speculative 
demand for residential properties. Nonetheless, property developers will 
benefit from the higher downpayments; partially offsetting the delayed 
disbursement of mortgage payments from banks.

Moody's report also says the exposure to IDR volatility faced by
Moody's-rated developers is low, as the developers can pass on higher 
raw material costs to buyers. In addition, most of the developers' US 
dollar debt is hedged to maturity, leaving only interest payments 
unhedged. Moody's expects its rated property developers' interest 
coverage ratio to decline by approximately 10% in the next 6-12 months, 
even if the USD/IDR rate weakens to 13,500 from 12,000.