Successful Issuance of the First Panda Bond, the Government Raised Funds of US$1.03 Billion
JAKARTA - The government has successfully issued the first Panda Bond in the Chinese financial market with a competitive yield rate, namely around 2 percent, much lower than the global bond yield in the US market which is in the range of 4-5 percent and domestic Government Securities (SBN) which has reached around 7.3 percent.
The issuance of yuan-denominated bonds (CNY) also received a positive response from investors reflected in the high market interest making the Panda Bond offering oversubscribed up to 2.4 times.
Director General of Financing and Risk Management (DJPPR) of the Ministry of Finance Suminto said the government has completed the issuance of Panda Bonds worth 7 billion Chinese yuan or around 1.03 billion US dollars on July 23, 2026.
The instrument was issued in two tenors, namely three years worth 5.6 billion Chinese yuan (about 827 million US dollars) with a yield of 1.90 percent, and five years of 1.4 billion Chinese yuan (about 207 million US dollars) with a yield of 2.19 percent.
According to Suminto, the low yield rate obtained is inseparable from the high demand of investors with a total order book reaching 17 billion Chinese yuan, or about 2.4 times the issuance value.
For a three-year tenor, the demand value was recorded at 12.38 billion Chinese yuan with a bid-to-cover ratio of 2.2 times. Meanwhile, the five-year tenor recorded a demand of 4.62 billion Chinese yuan with a bid-to-cover ratio of 3.3 times.
Thus, every 1 yuan of Chinese bonds issued by the government receives a demand of about 2.4 yuan from investors.
Suminto assessed that the high interest reflected the positive response of investors in the Chinese market to Indonesia's first Panda Bond issuance, and the settlement process is scheduled to take place on July 30, 2026.
He added that the issuance of Panda Bonds was carried out as part of the government's strategy to diversify sources of financing while expanding the investor base.
"The issuance of Panda Bonds in Chinese Yuan denomination is also very strategic in the context of China as a major trading and investment partner. The issuance of this Panda Bond is also synergistic with Local Currency Transactions between the two countries which are growing rapidly," he explained, quoted Friday, July 24.
Suminto assessed that the high booking value and competitive yield rates reflected investors' strong confidence in Indonesia's economic fundamentals and the credibility of government fiscal management.
"This is also reflected in the AAA/Stable ratings given by China Lianhe Credit Rating Co., Ltd. for the issuance of this Panda Bond," he said.