Indonesia is seeking to raise as much as 10 billion yuan ($1.5 billion) through a panda bond sale, returning to China's onshore debt market as Southeast Asia's largest economy confronts MSCI Inc.'s double downgrade threat. Indonesian officials met with some investors in Shanghai on Thursday for the potential offering, according to people familiar with the matter. The bond, which could be marketed as early as next month, may have maturities of three, five and seven years.
Suminto, director general of budget financing and risk management at Indonesia's Ministry of Finance, said the indicative size is 7 billion to 10 billion yuan, with issuance planned for November through early December. "The cost of funds for panda bonds is relatively lower and China's financial markets remain fairly stable amid current global financial market dynamics," Suminto said. The planned sale is Indonesia's second after a maiden 7 billion yuan offering in July.
The move comes as Indonesia's stock market is under pressure following MSCI's warning that the country's emerging-market status was in jeopardy, fueling concerns of potentially billions of dollars in capital outflows. The benchmark Jakarta share index gained for a third straight day after suffering its worst rout in nearly three decades last Friday. President Prabowo Subianto has said the country will not be "intimidated" by MSCI.
Emerging-market nations have increasingly tapped China's onshore bonds to reduce reliance on the US dollar. Panda bond issuance has reached nearly 250 billion yuan this year, already exceeding last year's total of about 184 billion yuan, according to Bloomberg data. Indonesia has also secured Chinese regulatory clearance to issue as much as 30 billion yuan of panda bonds from 2026 through 2028.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing