Abstract
The aim of this research is to study the determinants of sovereign credit ratings of Indonesia and
its neighborhood countries in the period of 1998-2016. Using secondary data and analyzed using
ordered probit, it is found that every credit rating agency has its own variables influencing to its
published credit ratings.In general, for Indonesia and its neighborhood countries, the variables with
significant and positive relationship are fiscal balance and current account deficit to GDP, freedom
index, and GDP per capita; while the variables with significant and negative relationship are external
debt to GNI and real exchange rate. Gross domestic savings to GDP influences credit ratings in
both ways. Interestingly, inflation does not affect the credit ratings. Indonesia and neighborhood
governments could use this information to manage their macroeconomic indicators in order to get
favorable ratings from credit rating agencies.
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