The bonds will be issued with tenors of 3 years and 5 years, and are estimated to offer yields of around 2.3%–2.5%.
Indonesia has also received approval to issue Panda Bonds of up to CNY30 billion in the next two years.
This step aims to:
✅Expanding government financing sources
✅Reduce dependence on the US dollar
✅Reducing debt costs when the dollar market is volatile
✅Strengthening Indonesia’s access to the Chinese bond market
Currently, the US dollar still dominates around 61% of Indonesia’s foreign debt. While the portion of debt in yuan is only around 4%, it is starting to show an increasing trend.
Panda Bond Indonesia has also obtained an AAA rating from a Chinese rating agency.
In your opinion, diversifying debt into yuan is the right step to reduce dependence on the dollar?
Or does it actually risk making Indonesia increasingly dependent on financing from China?
Source: Bloomberg
