Corporate bond issuance in Indonesia fell sharply in 2026, reaching Rp139.6 trillion through end-September, down 12.75 percent from the same period a year earlier, according to PT Pemeringkat Efek Indonesia (PEFINDO).
Funding costs squeeze issuers
Rating Director Hendro Utomo said rising funding costs were one factor behind the decline. “Rising funding costs are one factor affecting companies’ need to issue new bonds, amid tougher competition from other instruments such as SBN and Bank Indonesia’s SRBI that offer attractive yields relative to their risk,” he said, speaking Thursday at the TICMI Capital Market and Business Conference (TCMBC) at the Indonesia Stock Exchange building.
The average coupon on AAA-rated three-year bonds rose to about 7.5 percent in the second half of 2026, up from around 5.5 percent at the end of 2025. “Funding cost pressure does not only come from changes in credit risk, but also from higher benchmark yields in the market,” Utomo said. Bonds still exceeded maturities over the period. Yields on bonds rose, making bank lending more competitive, especially for issuers rated single-A and below.
Shorter tenors, shifting ratings
Issuers have increasingly turned to shorter maturities. The one-year tenor’s share of issuance rose to 34 percent as of September 2026 from 22 percent in 2025, while the five-year tenor made up 23.7 percent of issuance as of September. “Issuers’ tendency to choose short-term funding amid high interest rates is due to companies’ reluctance to lock in funding costs over a longer period,” Utomo said. PEFINDO noted the shift raises refinancing risk.
The rating mix also shifted. AAA-rated bonds accounted for 41 percent of issuance in 2026, down from 58 percent in 2025. AAA and AA bonds still offer yields below average bank lending rates, PEFINDO said.
Proceeds increasingly for investment
Working capital remained the dominant use of proceeds at 52 percent of total issuance, with refinancing at 28 percent. The investment share rose to 19 percent from a previous 8 percent. “This shift indicates that, amid rising funding costs, some companies still use the bond market to support business development,” Utomo said.
Related: PEFINDO sees 2027 corporate bond issuance at Rp170 trillion midpoint · Indonesia to keep bond issuance within 2026 Budget plan
Source: PT Pemeringkat Efek Indonesia (PEFINDO)
