Indonesia is weighing another yuan bond sale after issuing 7 billion yuan in July, a move that ties future debt-service costs to the yuan-rupiah exchange rate.
Bloomberg reported Oct. 22 that Suminto Sastrosuwito, director general of budget financing and risk management at Indonesia’s Finance Ministry, told it a second issue could total 7 billion to 10 billion yuan and take place from November to early December. Bloomberg said the possible maturities were three, five or seven years.
The July issuance comprised 5.6 billion yuan in three-year bonds with a 1.9% coupon and 1.4 billion yuan in five-year bonds with a 2.19% coupon, according to Bank of China, the lead underwriter. The sale was Indonesia’s first panda bond, a yuan-denominated bond issued in China’s domestic market.
Indonesia’s five-year government bond yield was 7.225% at the Oct. 21 close, the Asian Development Bank’s AsianBondsOnline reported. The 5.035-percentage-point gap with July’s 2.19% coupon compares different currencies and dates, so it does not measure the bonds’ relative borrowing costs.
The Finance for Development Lab says comparatively low Chinese interest rates and efforts to expand the yuan’s international use can encourage governments to issue yuan debt. But an issuer making payments in yuan faces exchange-rate exposure: if the rupiah weakens against the yuan, it needs more rupiah for the same payment. The group recommends comparing local-currency borrowing with the yuan bond’s full cost after swaps and other expenses; hedging can narrow or erase the apparent rate advantage.
For the July sale, Indonesia’s Finance Ministry cited investor-base expansion and funding diversification as aims. It set a target equivalent to $1 billion, subject to market conditions. The ministry has not confirmed the proposed sale’s final terms or said the MSCI consultation prompted it.
Separately, MSCI is consulting on a proposal to move its Indonesia Indexes from Emerging Market to Standalone Market status, following the index provider’s review of Indonesia. MSCI opened the consultation Oct. 15, set April 30, 2027, as the feedback deadline and said it will decide on or before June 30, 2027.
