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After upgrading Indonesia’s sovereign debt on Monday, Fitch Ratings announced on Wednesday that it had lifted the ratings of eight domestic banks’ foreign debt to ‘BB+’ from ‘BB.’

Analysts said that with such strong signs of optimism toward the country, Indonesia should reach investment grade in less than two years.

“Apart from the sovereign upgrades, the positive revisions of the banks’ issuer-default ratings reflect their relatively resilient financial performances,” Tan Lai Peng, director of Fitch’s financial institutions group, said in a statement.

Although loan quality deteriorated at most banks last year, the impact was contained, with lenders able to absorb higher credit costs thanks to solid profits, the ratings agency said.

“Expectations for better operating conditions this year should be generally supportive of credit quality and profitability ahead,” Tan added.

The lenders upgraded were PT Bank Mandiri, PT Bank Internasional Indonesia, PT Bank CIMB Niaga, PT Bank Rakyat Indonesia, PT Bank Central Asia, PT Bank Danamon, PT Bank OCBC NISP and PT Bank UOB Buana.

Bank Indonesia figures showed that while credit grew by only 10.7 percent last year and the ratio of bad loans increased to 3.8 percent, banking sector profits rose 35.2 percent compared with 2008 to Rp 41.4 trillion ($4.4 billion).

The banks welcomed the upgrades, saying they would help reduce their funding costs. “It will be good for Bank Mandiri and other lenders who want to raise capital or seek loans because the upgraded rating will enable us to get better pricing,” said Pahala Mansury, Bank Mandiri’s chief financial officer.

The lender is planning to issue $300 million of dollar-denominated bonds this year to strengthen its capital position.

David Sumual, an analyst with BCA, said the upgrade was a result of the resilience of the nation’s economy during the global financial crisis last year.

“Previously, many people expected that Indonesia would reach investment grade within two years. However, it is likely to be faster,” David said. “We deserve to have an investment-grade rating compared to Thailand, which has worse conditions in terms of macroeconomic and political stability.”