Indonesia Markets First Panda Bonds as It Diversifies Funding

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Or sign-in if you have an account.(Bloomberg) — Indonesia has begun marketing its inaugural yuan-denominated bonds in China’s domestic debt market, as Southeast Asia’s largest economy seeks to diversify funding sources amid currency volatility and fiscal challenges.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe country is offering three-year and five-year panda bonds, targeting a combined initial issuance size of as much as 7 billion yuan ($1 billion), according to bond offering documents.Indonesia has already tapped international debt markets in multiple currencies this year, including the euro, Japanese yen and offshore yuan, raising a total of around $7 billion, a record amount for its non-dollar issuance. The planned panda bond sale underscores Jakarta’s efforts to broaden its funding sources as it seeks to balance its growth ambitions with macroeconomic stability.Indonesia is raising the funds at a time of intense economic pressure, with the rupiah falling to a series of record lows this year while its stock market remains the world’s worst-performing. Concerns over President Prabowo Subianto’s increasingly state-focused policies have soured investor sentiment alongside a widening current account deficit and high energy prices.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againBank Indonesia has raised interest rates to help steady the currency, but risks from higher import costs, fuel subsidies and the government’s ambitious growth agenda continue.Earlier this year, Moody’s Ratings and Fitch Ratings Inc. cut their outlook on Indonesia’s sovereign credit rating to negative, citing concerns over governance under Prabowo’s administration, while maintaining their ratings. Chinese rating firm China Lianhe Credit Rating Co. has assigned a AAA credit rating to Indonesia.The panda bond debut also aligns with broader efforts across emerging markets to reduce reliance on the US dollar and expand access to alternative pools of capital. A successful issuance could create a pathway for more Indonesian borrowers to access China’s vast debt market.“For sovereigns and government-linked issuers in general, panda bonds are more strategic than driven by urgent funding needs,” David Yim, head of capital markets for Greater China and North Asia at Standard Chartered, said prior to the bond sale announcement.“Their decisions involve cross-border coordination and long-term objectives, but once they enter the market, they create benchmarks that pave the way for corporates from their own country or region to follow,” he added. Indonesia’s total government debt stood at 9,920.4 trillion rupiah ($553 billion) at end-March, with domestic securities accounting for the bulk of it, according to government data.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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