The first conventional government bond auction of 2026, held on 6-Jan, delivered a very strong outcome. The total incoming bids reached Rp90.9tn, sharply higher than Rp64.2tn in the previous auction (16-Dec) and above our Rp50tn 60tn expectation. This was also the largest demand recorded for a first bond auction since 2021. The strength was driven mainly by onshore investors, who submitted Rp82.7tn (90.9% of total bids), while foreign participation reached Rp8.3tn (9.1%).
By instrument, the demand was led by the 1-yr SPN, which attracted Rp17.0tn (18.7% of total bids), followed by the 14.6-yr FR106 (Rp16.4tn), the 10.3-yr FR108 (Rp14.9tn), and the 5.2-yr FR104 (Rp10.8tn). Reflecting the strong demand, the government upsized the issuance to Rp40tn, above the initial Rp33tn target. Notably, SPN issuance reached Rp9.15tn, the highest on record, lifting the SPN share to 22.8% of the total issuance (vs. only 11.8% in 2025 and 6.0% in 2024), in line with the government s strategy to increase short-term bill issuance this year. Thus, the weighted average cost of funds fell to 5.30% (vs. 6.50% average in 2025), while the average tenor shortened to 9.6 years. Including a recent Rp18.7tn private placement and the prefunding of global sukuk issuances, the total issuance has reached Rp93tn, or 6.3% of the full-year 2026 APBN target. We view the DMO s decision to upsize issuance positively amid strong demand, as it could ease issuance pressure in upcoming auctions and help stabilize government bond yields.
In the secondary bond market, INDOGB yields edged slightly higher across tenors despite strong foreign inflows of Rp1.93tn. The 5-yr FR109 yield rose to 5.46% (+1.9 bps), the 10-yr FR108 to 6.08% (+0.8 bps), the 15-yr FR106 to 6.36% (+0.7 bps), and the 20-yr FR107 to 6.49% (+1.1 bps). Offshore, the 5-yr USD sovereign yield eased to 4.42% (-0.8 bps), while Indonesia s 5-yr CDS tightened further to 67.71 (-0.47 bps). Meanwhile, the rupiah remained under mild pressure, weakening by 0.06% to Rp16,750/USD.
According to IDX s OTC trading report, Indonesian government bond trading activity rebounded sharply on Tuesday (6-Jan), with total volume surging to Rp52.9tn (vs. Rp32.9tn prior, or Rp32tn avg daily turnover in 2025). The FR0108 series led market activity, recording Rp5.8tn in trading volume. It was followed by the FR109 series which was recorded Rp4.5tn in trading volume.
As of 5-Jan-2026, foreign holdings of government bonds continued to increase to Rp881.5tn, equivalent to 13.39% of the outstanding. Year-to-date, other investors are the largest net buyers (+Rp18.4tn), followed by foreign investors (+Rp2.9tn), mutual funds (+Rp1tn) and retail investors (+Rp0.1tn). For the full-year 2025, Bank Indonesia remained the largest net buyer (+Rp153.7tn), followed by onshore banks (+Rp147.2tn) and insurance and pension funds (+Rp145.4tn).
In equities, the JCI extended its rally, gaining 0.84% to 8,933.61 (YTD: +3.32%), supported by a strong turnover of Rp34.1tn, and foreign investors stayed as net buyers with Rp0.59tn of inflows. Moreover, regional equities performed well, with the Nikkei up 1.32% and the Hang Seng up 1.38%.
Domestic Corp Bond Market
On the corporate side, trading activity strengthened on Tuesday (6-Jan), with total volume rising to Rp5.5tn (vs. Rp6.6tn on 5-Jan). The turnover came in broadly in line the prior week s daily average of Rp5.4tn, above the 2025 YTD average of Rp4.0tn and, well above the 2024 daily average of Rp2.05tn.
The PALM02BCN3series (maturing on 18-Sep-27), rated idA, led the segment with Rp398bn in trading volume. The bond s price slipped to 104.81 (-0.46%), driving the yield sharply lower to 5.03% (+28.24 bps). This was followed by the WIKA02ACN2 series (maturing on 18-Feb-27), rated idCCC, which recorded Rp323bn in trading volume. Its price edged up to 90.10 (+20.05%), pushing the yield down to 16.37% (+1,787.10 bps).
