Indonesian firms set to extend bond issuance surge on low rates

[JAKARTA] Indonesian companies look set to charge ahead with bond issuance in the last six months of the year, building on a record-breaking first half as they face a wave of maturing debt and favourable borrowing costs.

Borrowers have 89.5 trillion rupiah (S$7 billion) of local-currency bonds due in the second half, which will push total maturities for 2025 to an annual record, according to data compiled by Bloomberg. Issuers already raised 106.3 trillion rupiah in the first six months of the year.

Relatively low interest rates are fuelling the momentum. Yields on three-year rupiah corporate bonds – a typical tenor – have fallen by about 70 basis points this year, tracking Bank Indonesia’s interest rate cuts, according to data from Indonesia Bond Pricing Agency.

The bond boom in South-east Asia’s largest economy offers fresh credit opportunities in the region and underscores investor appetite for emerging market debt, as global trade tensions stemming from Donald Trump’s tariffs prompt greater portfolio diversification.

“We expect issuers will continue to tap the market in the second half of this year, although they won’t be as high as the first half,” according to Puneet Punj, managing director of global financial markets for Bank DBS Indonesia.

At the beginning of the year, about 149 trillion of notes were slated to mature this year, data compiled by Bloomberg shows.

Among the biggest issuers in the first half were state-owned lender PT Bank Negara Indonesia, which raised five trillion rupiah last month, and PT Bank Mandiri with a 4.5 trillion rupiah green bond in March.

Fund-raising by banks in the bond market will likely remain busy as the sector’s liquidity remains tight after a rapid expansion in corporate lending in recent years.

Indonesian banks’ loan-to-deposit ratio hit 89 per cent in December – the highest since 2020 – and hovered near that level in March, according to the latest data compiled by Bloomberg. BLOOMBERG