Market Summary

Yield Movements

The local currency (LCY) government bond yield curve in Indonesia shifted downward from 2 June to 29 August, largely influenced by continued monetary policy easing to boost economic growth amid low inflation expectations. Bank Indonesia have reduced its policy rate consecutively during its 15-16 July and 19-20 August meetings by 25 basis points each to 5.00%. The central bank also hinted that there was further scope for rate cuts given the need to strengthen the economy amid a weakening global growth outlook.

Local Currency Bond Market Size and Issuance

Total LCY bonds outstanding size tallied IDR7,830.4 trillion at the end of June, posting a 0.1% quarter-on-quarter (q-o-q) contraction. Government bonds gained 1.3% q-o-q in the second quarter (Q2) of 2025, albeit moderating from the previous quarter's 2.7% q-o-q expansion while corporate bonds expanded 3.4% q-o-q from 2.2% q-o-q in the same period. Meanwhile, LCY bond issuance totaled IDR633.9 trillion in Q2 2025, down by a marginal 0.7% q-o-q, on reduced issuance in both the government and corporate bond segments.

Sustainable Bond Market

At the end of June, outstanding sustainable bonds in Indonesia totaled USD14.1 billion, posting a contraction of 3.7% q-o-q in Q2 2025 following 2.7% q-o-q growth in the previous quarter. Green bonds continued to be the predominant bond type, accounting for 70.2% of the sustainable bond stock. Bonds with remaining tenors over 5 years accounted for 58.9% of total sustainable bonds outstanding, largely driven by a higher share of longer-tenor maturities in government bonds (73.5%).