Market Summary

Yield Movements

Local currency (LCY) government bond yields in Indonesia climbed for most maturities from 2 September to 31 October, largely tracking the yield movements of United States Treasuries. Sovereign bond yields rose an average of 15 basis points for maturities of over 2 years, largely driven by uncertainties over the pace of the United States Federal Reserve's monetary policy easing as well as some domestic concerns over the policy direction of the new government. Meanwhile, yields for tenors of 2 years or less fell by an average of 8 basis points over continued moderation in inflation.

Local Currency Bond Market Size and Issuance

The LCY bond market in Indonesia reached a size of IDR7,545.6 trillion at the end of September, with growth moderating to 4.8% quarter-on-quarter (q-o-q) in the third quarter (Q3) of 2024 from 6.1% q-o-q in the second quarter. Much of the growth was contributed by government bonds, which expanded 2.3% q-o-q in Q3 2024, versus 1.6% q-o-q in the prior quarter, as improved domestic financial conditions supported new issuance. On the other hand, the corporate bond stock contracted 1.7% q-o-q over a high volume of maturities and reduced issuance in Q3 2024. Total LCY bond issuance tallied IDR775.1 trillion in Q3 2024, with growth largely supported by government bonds.

Sustainable Bond Market

The sustainable bond market in Indonesia largely comprises green bond instruments, public sector financing, and long-term tenors. Sustainable bonds outstanding in Indonesia reached USD13.7 billion at the end of September on accelerated growth of 10.2% q-o-q in Q3 2024, up from 3.5% in Q2 2024, amid robust issuance.