Indonesia: Market Summary
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Market Summary
Yield Movements
Between 1 June and 30 August, local currency (LCY) sovereign bond yields in Indonesia fell an average of 25 basis points across the curve, leading the yield curve to shift downward. The decline in yields was largely supported by easing inflation and rising expectations of a policy rate cut by Bank Indonesia and the United States Federal Reserve.
Local Currency Bond Market Size and Issuance
The LCY bond market in Indonesia recorded a faster quarter-on-quarter (q-o-q) expansion in the second quarter (Q2) of 2024 with all bond types posting positive growth. The outstanding size of the market totaled IDR7,200.3 trillion at the end of June, with growth accelerating to 6.1% q-o-q in Q2 2024 from 3.1% q-o-q in the first quarter. In Q2 2024, LCY bond issuance rebounded buoyed by robust growth in central bank and corporate bonds. Aggregate issuance reached IDR760.3 trillion in Q2 2024 on growth of 12.3% q-o-q, reversing the 0.6% q-o-q contraction in the previous quarter.
Sustainable Bond Market
The sustainable bond market of Indonesia is dominated by green bond instruments and long-term financing. Green bonds were the more prevalent sustainable bond type, accounting for 80.0% of the sustainable bond total at the end of June. About 65% of sustainable bond financing was in longer tenors (over 5 years), owing to the strong participation of the public sector. Indonesia's sustainable bond market had a size-weighted average tenor of 7.3 years at the end of June.