Market Summary

Yield Movements

Between 1 December 2024 and 28 February 2025, the local currency (LCY) government bond yield curve in Indonesia shifted down, with yields falling an average of 6 basis points across the curve. The downward shift was largely driven by the rate cut of Bank Indonesia in January to support economic growth. The central bank also slightly lowered its economic growth forecast for 2025 to a range of 4.7%–5.5% from an estimate of 4.8%–5.6% in December.

Local Currency Bond Market Size and Issuance

At the end of December, the outstanding LCY bond stock in Indonesia reached IDR7,688.0 trillion on moderated growth of 1.9% quarter-on-quarter (q-o-q) in the fourth quarter (Q4) of 2024 from 4.8% q-o-q in the third quarter (Q3). Government bonds recorded slower growth of 2.0% q-o-q in Q4 2024 from 2.3% q-o-q in Q3 2024, amid reduced issuance due to frontloading in earlier quarters. In contrast, the corporate bond segment posted a 3.4% q-o-q expansion in Q4 2024, reversing the 1.7% q-o-q contraction in the prior quarter, buoyed by robust issuance. Meanwhile, the stock of central bank securities was only marginally changed in Q4 2024 on growth of 0.3% q-o-q. In Q4 2024, LCY bond issuance tallied IDR693.5 trillion, reflecting a 10.5% q-o-q contraction on reduced issuance by the government.

Sustainable Bond Market

By the end of December, Indonesia’s sustainable bond market is comprised predominantly of green bond instruments, financed largely by the public sector, and denominated mostly in foreign currency. The outstanding size of sustainable bonds reached USD13.9 billion, with growth decelerating to 1.8% q-o-q in Q4 2024 from 10.2% q-o-q in Q3 2024 driven in part by a contraction in issuance.