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 bond 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, said the people, who asked not to be identified discussing private information.
The indicative size of the issuance is in the range of 7 billion to 10 billion yuan, said Suminto, director general of budget financing and risk management at Indonesia's Ministry of Finance, in response to a Bloomberg query. The issuance is planned for November through early December, he said.
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“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. Issuing yuan-denominated debt supports the Indonesian government's “efforts to diversify instruments and expand the investor base,” he added.
The planned panda debt sale is Indonesia's second after a maiden offering in July when it raised 7 billion yuan. It comes as Indonesia's stock market is under pressure following MSCI's warning that Indonesia'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 on Thursday after suffering its worst rout in nearly three decades last Friday. Indonesian President Prabowo Subianto has said the country will not be “intimidated” by MSCI.
Emerging-market nations have been increasingly tapping China's onshore bonds to reduce reliance on the US dollar and expand access to alternative pools of capital. Lower borrowing costs and a push to expand the yuan's global use have fueled a surge in panda bond sales this year. Issuance has reached nearly 250 billion yuan, already exceeding last year's total of about 184 billion yuan, according to data compiled by Bloomberg.
Indonesia sees opportunities for the yuan to play a broader role in its economy, from trade and investment transactions and eventually into financial and investment activities, Yulian Wihantoro, head of Bank Indonesia's Beijing Representative Office, said at a forum in Beijing on Wednesday.
The Southeast Asian nation has secured Chinese regulatory clearance to issue as much as 30 billion yuan of panda bonds from 2026 through 2028, a public filing shows. Its July issuance comprised of three-year notes at 1.9% and five-year notes at 2.19%.
Indonesia has already tapped international debt markets in multiple currencies this year, including the euro, yen and offshore yuan.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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