TEMPO.CO, Jakarta - Indonesia is preparing to issue Panda Bonds worth up to US$1 billion as the government explores new financing options and seeks to diversify its international funding sources.
Finance Minister Purbaya Yudhi Sadewa said the government’s initial target is around US$1 billion, although the final amount will depend on market conditions and investor interest.
“Our initial target is probably US$1 billion, but we will see how the market responds. If the market can absorb more, we will increase it depending on market conditions,” Purbaya told ANTARA in Beijing on Thursday, June 18.
The statement came after Purbaya held meetings with Chinese Finance Minister Lan Fo’an, officials from the People’s Bank of China (PBOC), the Asian Infrastructure Investment Bank (AIIB), and investors during his official visit to China from June 16-19, 2026.
The Indonesian government is preparing the Panda Bonds issuance as part of efforts to diversify international financing sources and support financial stability.
What Are Panda Bonds?
Panda Bonds are yuan-denominated bonds issued by foreign governments, international institutions, or companies in China’s domestic bond market. The instrument allows foreign issuers to raise funds directly from investors in mainland China.
To issue Panda Bonds, issuers must meet requirements set by Chinese financial authorities, including the PBOC and the National Association of Financial Market Institutional Investors (NAFMII).
Purbaya said the PBOC has supported Indonesia’s plan and encouraged the government to accelerate the licensing process.
“During our meeting with the PBOC, we were asked to accelerate the licensing process. The underwriter had not yet submitted the required documents, and the PBOC requested that they be submitted soon so the process could continue,” he said.
He expressed optimism that the Panda Bonds could be issued this year.
“The book building process should begin next week once the permit is issued. In about two weeks, we should have the final result,” Purbaya said.
Indonesia Seeks Alternative Funding Sources
Purbaya said the planned issuance is part of Indonesia’s efforts to diversify financing sources and avoid relying on a single currency.
Book building refers to the initial offering period when issuers and underwriters collect investor demand and orders within a certain price range.
“We want to diversify financing sources so they are not affected by only one currency,” Purbaya said.
He added that Indonesia could also explore the use of the local currency transaction framework between Indonesia and China, which allows transactions between the two countries to use their respective currencies.
“Transactions using yuan can be directly converted into rupiah because of the agreement between the central banks of Indonesia and China. We will also try to utilize the bilateral swap agreement so it can directly support rupiah transactions and reduce pressure on the rupiah,” he said.
Purbaya said discussions with Chinese Finance Minister Lan Fo’an were also positive, noting that China’s Finance Ministry could play an important role in facilitating investor interest.
“The support from China’s Finance Ministry is very important for the success of our bond issuance plan,” he said.
Potential Benefits and Considerations of Panda Bonds
By issuing bonds in yuan or renminbi, Indonesia could gain access to China’s financial market and a broader investor base. However, the impact of the instrument will depend on market conditions, investor demand, and the terms of the issuance.
Potential benefits of Panda Bonds, as quoted by Antara:
1. Diversifying financing sources
Panda Bonds could provide Indonesia with an alternative source of international financing beyond traditional US dollar- and euro-denominated bonds. The move may help broaden funding options and reduce reliance on a single currency.
2. Potential access to competitive financing costs
If borrowing conditions in China are favorable, yuan-denominated bonds could offer financing costs that are competitive with other international debt markets. However, the final cost would depend on interest rates, investor appetite, and market conditions.
3. Managing currency exposure
For countries with close economic ties to China, yuan-based financing could help diversify currency exposure and reduce dependence on US dollar funding. However, exchange rate risks remain a factor that issuers need to manage.
4. Expanding investment options
For Chinese investors, Panda Bonds provide an opportunity to invest in international issuers through China’s domestic financial market.
The use of Panda Bonds has grown in recent years as China promotes the international use of the yuan. Several governments and companies have used the instrument to access China’s bond market, although adoption continues to depend on regulatory requirements and market conditions.
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