The first government bond auction for 4Q25 recorded a strong rebound in demand, with the total incoming bids jumping 28.1% to Rp126.2tn (vs. Rp98.5tn in the 23-Sep auction and Rp91.5tn YTD average), well above our Rp85tn 95tn forecast. This marked the second-highest demand so far this year and the third-highest in history, with several FR series hitting record-high demand this year. The bids were concentrated in the 10.5-yr FR108 (Rp47tn; 37.3% of total), followed by the 14.9-yr FR106 (Rp28.2tn) and the 5.4-yr FR109 (Rp19tn). As expected, onshore investors dominated, while foreign participation eased to Rp7.7tn (6.1% of total) from Rp12.8tn previously, below the YTD average of Rp17.7tn (19.3%). Meanwhile, non-competitive bids rose to Rp27.8tn (22% of total, from 18.4% in the prior auction). The detailed breakdown of investor allocation will be available upon settlement on 9-Oct. Year-to-date, onshore banks have been the largest type of primary market participant, securing Rp225.7tn (42.8% of total conventional bond issuance), followed by foreign investors (Rp99.3tn) and insurance & pension funds (Rp83.2tn).
In line with the solid demand, the government issued Rp28tn (below the previous Rp33tn but above the Rp23tn target), highlighting continued financing flexibility, supported by SAL buffers, pre-funding, and front-loading. However, the weighted average cost of funds increased to 6.20% (vs. 5.96% prior; YTD avg.: 6.65%), while the average tenor lengthened to 15.9 years (vs. 11.8 years prior). Year-to-date, the total gross bond issuance has reached Rp1,066.2tn, equivalent to 77.7% of our full-year target (deficit assumption: -2.78% of GDP). We estimate the remaining gross issuance requirement at ca. Rp37.1tn per biweekly auction, compared to the average incoming bid of Rp122.8tn and the realized issuance of Rp40tn. However, given the government s lower 4Q25 issuance target of Rp180tn (implying Rp30tn per biweekly auction) and following the latest auction result, the government may only need to issue ca. Rp29tn per auction for the remainder of the year. The smaller-than-expected issuance likely reflected a narrower fiscal deficit outlook than previously anticipated.
In the secondary market, INDOGBs rallied post-bond auction, with yields falling across the curve amid foreign inflows of Rp4.13tn (vs. +Rp1.92tn prior). The 5-yr FR104 traded at 104.49 (+0.07%), yielding 5.42% (-1.7 bps); the 10-yr FR103 at 103.75 (+0.34%), yielding 6.23% (-4.7 bps); the 15-yr FR106 at 104.18 (+0.45%), yielding 6.68% (-5.0 bps); and the 20-yr FR107 at 103.71 (+0.09%), yielding 6.78% (-0.8 bps). Offshore, the 5-yr USD global bond yield inched up to 4.42% (+0.1 bps), while Indonesia s 5-yr CDS stood at 78.1 bps (-0.02 bps). The rupiah strengthened slightly by 0.08% to Rp16,540/USD (YTD: -2.72%).
According to IDX s OTC trading report, Indonesian government bond trading activity rebounded strongly, with total volume more than doubling to Rp42.2tn (vs. Rp18.7tn on 6-Oct), fueled by robust demand in the government bond auction held on the same day. Despite the upswing, the figure remained slightly below the prior week s daily average of Rp43.8tn, while surpassing both the 2025 year-to-date (YTD) daily average of Rp32.4tn and the 2024 daily average of Rp21.7tn. The 10.5-yr FR0108 series (maturing on 15-Apr-36) led market activity, booking Rp7.6tn in trading volume. Its price inched up to 102.44 (+0.48%), driving the yield slightly lower to 6.18% (-6.33 bps). This was followed by the 5.4-yr FR0109 series (maturing on 15-Mar-31), which recorded Rp4.7tn in trading volume. Its price edged up to 102.44 (+0.04%), bringing the yield marginally lower to 5.35% (-0.93 bps).
Regarding flows, foreign ownership of government bonds stood at Rp901.6tn (13.96% of outstanding) as of 3-Oct. YTD, Bank Indonesia has remained the largest net buyer (+Rp143.5tn), followed by onshore banks (+Rp113.2tn), insurance & pension funds (+Rp72.4tn), others (+Rp29.4tn), foreigners (+Rp25tn), mutual funds (+Rp19.5tn), and retail investors (+Rp16.8tn).
On equities, the JCI extended gains by +0.36% to 8,169.28 (vs. +0.27% prior; YTD: +15.39%), led by transportation (+3.0%), energy (+2.62%), and infrastructure (+2.33%). Meanwhile, foreign investors posted mild outflows of Rp89.4bn (vs. +Rp2.02tn prior), bringing the YTD outflows to Rp54.8tn. The turnover was stable at Rp28.7tn, above the YTD average of Rp15.6tn. Regionally, Asian equities were mixed, with Japan s Nikkei 225 Index flat (+0.01%) and Singapore s Straits Times Index up (+1.14%).
On the macro front, Indonesia s FX reserves declined to USD 148.7bn in Sep-2025 (vs. USD 150.7bn in Aug-2025), the lowest since Jul-2024, reflecting government debt repayments and rupiah stabilization efforts amid global volatility. Reserves remained ample, equivalent to 6.2 months of imports (or 6.0 months if including government debt service), well above the international adequacy benchmark of 3 months.
Domestic Corp Bond Market
On the corporate side, bond trading activity moderated on Tuesday (7-Oct), with total volume easing slightly to Rp3.4tn (vs. Rp3.8tn on 6-Oct). The figure remained below both the prior week s daily average of Rp4.7tn and the 2025 YTD average of Rp3.9tn, while staying comfortably above the 2024 daily average of Rp2.05tn.
The SMLPPI01CN1 series (maturing on 4-Oct-29), rated idA(sy), led the segment, posting Rp376bn in trading volume. Its price advanced to 111.02 (+11.02%), compressing the yield sharply to 7.76% (-323.71 bps). This was followed by the SMDSSA01CCN3 series (maturing on 26-Nov-29), rated idAA(sy), which booked Rp172bn in trading volume. Its price slipped to 102.82 (-1.17%), lifting the yield to 7.82% (+33.94 bps).
Pefindo has affirmed idA+ ratings to PT Merdeka Copper Gold Tbk (MDKA) as well as its outstanding Shelf-Registered Bond III, Shelf-Registered Bond IV, and Shelf Registered Bond V. Outlook for the corporate rating is stable. According to Pefindo the corporate rating reflects MDKA s vertically integrated operations, well-diversified business, and sizeable reserves and resources. Meanwhile, the rating is constrained by its moderate financial policy and capital structure as well as exposure to fluctuating commodity prices.
