Jakarta is teeing up a new panda bond, targeting as much as 10 billion yuan, or about $1.5 billion, as it returns to China's domestic debt market. It follows the country's initial panda deal earlier this year.
People familiar with the matter say Indonesian officials spoke with investors in Shanghai on Thursday about the possible sale. Those people also indicated the bonds could start marketing next month.
Responding to Bloomberg, Suminto - the Finance Ministry's chief overseeing budget financing and risk management - put the working amount at 7 billion to 10 billion yuan, with issuance targeted for November through early December.
The prospective notes may be offered in three, five, and seven year maturities. Indonesia's first panda bond in July raised 7 billion yuan, split into three year paper at 1.9% and five year paper at 2.19%.
A public filing shows Indonesia is cleared to sell as much as 30 billion yuan in panda bonds spanning 2026 to 2028. It has also tapped global markets this year in euros, yen, and offshore yuan.
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Suminto said issuing yuan debt backs the government's "efforts to diversify instruments and expand the investor base." He added, "The cost of funds for panda bonds is relatively lower and China's financial markets remain fairly stable amid current global financial market dynamics."
Indonesia also sees room for the yuan to take on a larger role across its economy, spanning trade and investment transactions and, over time, broader financial and investment activity, according to Yulian Wihantoro, who heads Bank Indonesia's Beijing Representative Office.
This funding plan lands as MSCI's double downgrade threat puts Indonesia's emerging market standing under a cloud, raising fears of large capital outflows. Even so, the benchmark Jakarta stock index rose for a third session on Thursday after suffering its steepest drop in nearly 30 years last Friday, and President Prabowo Subianto said the country will not be "intimidated" by MSCI.
Meanwhile, emerging markets are leaning into China's onshore market to diversify away from the dollar and widen investor access. As of Oct. 22, Bloomberg data show this year's panda bond volume is approaching 250 billion yuan, surpassing last year's roughly 184 billion yuan. The bottom line: watch pricing versus Indonesia's July panda yields and its euro, yen, and offshore yuan curves to gauge funding costs and any spillover to Indonesian credit and equities.
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