Indonesia raises Rp18.5 trillion in debut Panda Bond sale

Indonesia has made a significant move in diversifying its funding sources by successfully issuing its first Sovereign Bond denominated in Chinese Yuan, commonly known as a Panda Bond. The government raised CNY 7 billion, equivalent to approximately Rp 18.5 trillion, in its debut sale. The issuance garnered strong demand from investors in the Chinese market, achieving a peak overbook of around CNY 17 billion and a bid-to-cover ratio of 2.4 times. This robust investor response allowed the government to secure efficient funding costs with competitive yield levels. The proceeds from this Panda Bond issuance are earmarked for fulfilling financing needs within the 2026 State Budget. A key factor contributing to the bond's success was its AAA rating from China Lianhe Credit, the highest possible rating. Finance Minister Purbaya Yudhi Sadewa highlighted the importance of this rating, noting that China is a substantial and promising market for bond issuance. He explained that the AAA rating reflects Indonesia's strong economic growth, solid fundamentals, its position as Southeast Asia's largest economy, and its resilience to external shocks, alongside a debt-to-GDP ratio below 40 percent.

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The large demand from investors enabled the government to obtain efficient funding costs through the establishment of competitive yield levels.