Foreign Investors Still Enter Even Though The Indonesian SBN Spread Is Getting Narrower

Director of the Department of Monetary Management & BI Securities Ronald D. Parluhutan (left). (Photo: Aris Nurjani / VOI)

YOGYAKARTA - Bank Indonesia (BI) revealed that although the difference in returns (spread) between Government Securities (SBN) of Indonesia and the US Treasury continues to narrow, foreign investors' interest in the Indonesian financial market remains high.

According to Bank Indonesia (BI) data as of August 19, 2025, the spread between the yield of the 10-year SBN tenor with the same US Treasury tenor fell to only 205 basis points (bps) or 2.05 percent, lower than the previous year's position of 240 bps.

"The spread between SBN and US securities is getting smaller and smaller, on August 19 by 205 bps," said Director of the Department of Monetary Management & BI Securities Ronald D. Parluhutan in BI policy activities to Maintain Stability and Encourage Growth, Friday, August 22.

Nevertheless, he said that Indonesia's spreads were still more competitive than several countries in areas such as the Philippines had only 157 bps spreads, while Thailand and South Korea were in negative areas, namely 301 bps and 151 bps, respectively.

According to him, this situation also supports the flow of foreign funds into the Indonesian SBN market where until August 19, 2025, non-resident positions reached Rp952.98 trillion, an increase from the position at the end of July of Rp935.71 trillion, with ownership in SBN of around 14.64 percent.

Meanwhile, ownership by the resident decreased from IDR 5,604.33 trillion on July 31 to IDR 5,557.63 trillion as of August 19, 2025.

However, domestic investors are still the majority with a portion of 85.36 percent of the total SBN ownership of IDR 6,510.64 trillion.

"Indeed, there is currently a narrowing (spread) as we said, but we see that foreign inflows are still maintained," said Ronald.

He added that the 10 year tenor SBN yield decline was in line with BI's monetary easing policy and so far this year, the benchmark interest rate has been lowered four times to the 5 percent level, which has also suppressed SBN yields.

"Because the BI Rate has been down several times and this is maintained even though it is in the midst of a narrow decline in spreads. The non-resident ownership is 14.6 percent," he said.