Demand in the final conventional bond auction of 2025 (16-Dec) continued to soften, with the total incoming bids falling to Rp64.2tn, down from Rp69.6tn in the previous auction and well below the YTD average of Rp89.9tn, as well as below our Rp72tn 82tn forecast range. The 5.2-yr FR109 remained the most sought-after series, although its bids eased to Rp15.4tn (vs. Rp17.4tn previously), accounting for 31.6% of the total demand. The 14.7-yr FR106 and 10.3-yr FR108 followed, attracting Rp12.1tn and Rp11.6tn, respectively. Demand for other series was generally weaker, except for the 1-yr SPN, whose bids rebounded to Rp6.8tn and were above the previous auction s figure and its YTD average (vs. Rp4.8tn prior, or YTD avg.: Rp5.7tn).
Domestic investors remained the anchor buyers, although their bids also declined to Rp57.5tn (vs. Rp65.7tn previously), accounting for 89.5% of the total demand. Offshore participation improved modestly to Rp6.7tn (10.5% of total), with the foreign awarded-to-bid ratio rising to 25.4%. The government issued Rp15tn, in line with its initial target and lower than the prior auction s figure of Rp25tn. The weighted average cost of funds fell further to 5.92% (vs. 6.17% prior), while the average tenor shortened to 14.8 years (vs. 17.2 years prior). Year-to-date, the gross issuance has reached Rp1,359.6tn, equivalent to 99.1% of our full-year projection..
In the secondary market, the INDOGB was mostly slightly up, following the bond auction result. The 5-yr FR104 yield eased to 5.59% (-0.2 bps), while the 10-yr FR103 yield edged slightly higher to 6.16% (+0.7 bps). Longer tenors outperformed, with the 15-yr FR106 and 20-yr FR107 declining to 6.42% (-1 bps) and 6.53% (-0.4 bps), respectively. Offshore, the 5-yr USD government bond yield inched up to 4.45% (+0.3 bps), while Indonesia s 5-yr CDS tightened to 70.3 (-1.3 bps). Foreign investors returned to a small net buy of Rp38bn, while the rupiah weakened slightly by 0.14% to Rp16,692/USD (vs. -0.17% prior; or YTD: -3.52%).
According to IDX s OTC trading report, Indonesian government bond trading activity fell sharply on Tuesday (16-Dec), with total volume falling by nearly half to Rp9.7tn (vs. Rp16.2tn on 15-Dec). The figure remained below the prior week s daily average of Rp21.5tn, the 2025 YTD average of Rp32.5tn, and the 2024 daily average of Rp21.7tn. The 6.3-yr FR0091 series (maturing on 15-Apr-32) led market activity, recording Rp1.9tn in trading volume (vs. Rp1.4tn previously). Its price slipped marginally to 102.36 (-0.01%), with the yield edging up to 5.92% (+0.17 bps). This was followed by the 3-yr ORI028T3 series (maturing on 15-Oct-28), which recorded Rp1.4tn in trades. Its price was relatively unchanged at 100.60, offering a yield of 5.12% (-0.02 bps).
Based on the DMO data as of 12-Dec, foreign holdings of government bonds edged up to Rp873.6tn (13.32% of outstanding). Year-to-date, domestic banks remain the largest type of net buyer, followed by Bank Indonesia, insurance and pension funds, and mutual funds. Foreign investors remain net sellers YTD ( Rp3.0tn), although the pace of outflows continues to slow, alongside retail investors ( Rp3.3tn).
Meanwhile, the JCI rebounded by 0.43% to 8,686, led by gains in the technology and energy sectors. The trading value remained elevated at Rp29.5tn, well above the YTD average. However, foreign investors turned net sellers, recording Rp934.6bn of outflows. Regionally, most Asian equity markets closed lower amid renewed concerns over China s growth outlook and profit-taking in high-valuation technology stocks. The Hang Seng index fell by -1.54% (YTD: +28.6%), while the Nikkei 225 index fell by -1.31% (YTD: +25.63%).
Bank Indonesia will announce its December policy decision on Wednesday, 17-Dec. Based on our market polling of 147 respondents, expectations are split but lean toward a policy hold. The majority (57%) expects BI to keep the policy rate unchanged at 4.75%, while a sizable minority (43%) anticipates a 25-bps rate cut to 4.50%. The distribution highlights ongoing debate in the market between preserving policy stability amid global uncertainty versus creating additional domestic stimulus as inflation moderates and global financial conditions ease.
Domestic Corp Bond Market
On the corporate side, trading activity moderated on Tuesday (16-Dec), with total volume dropping sharply to Rp3.0tn (vs. Rp9.2tn on 15-Dec). The figure fell below both the prior week s daily average of Rp6.1tn and the 2025 YTD average of Rp3.9tn, while remaining above the 2024 daily average of Rp2.05tn.
The WSBP02CB series (maturing on 12-Dec-33), rated idB, led the segment with Rp227bn in trading volume. Its price slipped slightly to 75.00 (-0.03%), pushing the yield higher to 3.62% (+0.84 bps). This was followed by the SMMA03CN1 series (maturing on 5-Apr-29), rated irAA, which recorded Rp211bn in trades. Its price jumped to 113.83 (+2.81%), driving the yield sharply lower to 5.40% (-97.72 bps).
Pefindo has affirmed idAA+ rating with stable outlook to PT Hino Finance Indonesia (HFI) and assigned idAA+ rating to its outstanding bonds. Meanwhile, the rating reflects the following factors: 1) HFI s status as a strategic subsidiary of its majority shareholders, Hino Motors Limited, Japan, and Salim Group; 2) Strong market position in the truck and bus leasing business; 3) Very strong asset quality profile; and 4) Very strong capitalization indicators. Meanwhile, the rating is constrained by high cost-to-income ratio and tight competition in its business segment.
Pefindo has affirmed idA+ ratings for PT Indah Kiat Pulp and Paper Tbk (INKP) with stable outlook. Pefindo has also affirmed idA+ ratings for INKP s outstanding bonds and its idA+(sy) ratings for its outstanding sukuk. According to Pefindo, the corporate rating reflects INKP s very strong market position, good vertically integrated operations, as well as good product and customer geographical diversity. Meanwhile, the rating is constrained by moderate capital structure, risks related to the volatility of products and raw material prices, as well as high working capital needs.
