The government will hold another sukuk auction today on 19-May, with a target of Rp12tn, or the same as the previous sukuk auction s figure. The offered series include the SPNS (1-mo, 6-mo, and 9-mo tenors), as well as PBS030 (2.2-yr), PBS040 (4.5-yr), PBSG002 (7.4-yr), PBS034 (13.2-yr), and PBS038 (23.6-yr). We still expect demand to continue to be higher than targeted but slightly lower than in the previous sukuk auction, estimated at Rp18tn (range: Rp13tn-23tn).
Sukuk auction recap (5-May): The lowest incoming bids so far this year. Sukuk auction demand weakened significantly on 5-May, with the total incoming bids falling by -37% to Rp21.2tn (vs. Rp33.6tn on 21-Apr; YTD avg.: Rp36.2tn), marking the lowest demand so far this year. Demand remained concentrated in PBS series (60.6% of total bids), although the share declined from prior levels of 70%, or the YTD average of 62.6%. Demand for SPNS series reached Rp8.4tn (vs. Rp10.2tn in the previous auction), but the portion to total bids rose to 39.4% (vs. 30.4% prior), likely reflecting competition from higher-yielding SRBI instruments. By series, demand was led by the 23.6-yr PBS38 at Rp4.3tn, followed by the 9-mo SPNS at Rp4.2tn and the 1-mo SPNS at Rp2.8tn.
The government maintained issuance at Rp12tn (in line with target but lower than Rp15tn prior). SPNS issuance declined further to Rp3.2tn (26.3% of total). The average tenor increased to 11.8 years (vs. 6.8 years prior), while the weighted average cost of funds rose to 6.50% (vs. 6.07%). Including the latest conventional bond auction issuance, the year-to-date issuance has reached Rp681.5tn, or 43.5% of the FY2026 target.
Investor breakdown: Onshore banks were the primary buyers in the most recent sukuk auction. Based on DMO data, in the last sukuk auction on 5-May, we estimate that onshore banks were the type of biggest net buyer, securing Rp3.8tn (31.4% of total issuance). Close behind them were insurance and pension funds (Rp3.2tn or 26.9%), other investors (Rp2.2tn or 18.6%), Bank Indonesia (Rp2.1tn or 17.7%), and mutual funds (Rp0.6tn or 5.2%). Thus, year-to-date, onshore banks have still been the biggest type of net buyer, totaling Rp46.1tn YTD (or 45.6% of total sukuk issuances YTD-2026). They were followed by Bank Indonesia and other investors, which reported net buys of Rp24.8tn and Rp14.9tn, respectively, or 24.5% and 14.8% of total sukuk issuances YTD. Meanwhile, insurance & pension funds, mutual funds, foreign investors, and retail investors have bought 10.8%, 3.3%, 0.9%, and 0.1% of the total sukuk issuance YTD-2026.
Furthermore, including the non-auction primary market, secondary market, and maturing bonds, onshore banks were also the biggest sukuk net buyer type, totaling +Rp28.7tn YTD. Close behind, Bank Indonesia and other investors posted sukuk net buys of +Rp25.7tn and +Rp18.5tn, respectively. Insurance & pension funds and mutual funds also posted as sukuk net buyers, reaching +Rp12.6tn and +Rp7.6tn, according to the DMO bond flow data with settlement date as of 13-May-2026.
Current sukuk auction preview (19-May): Demand will remain solid but lower than in the previous sukuk auction. We expect the total demand to remain higher than its target but lower than the previous one, estimated at Rp18tn (range: Rp13tn-23tn). The liquidity will be supported by Rp479.2bn of maturing bonds, plus Rp256.7bn in bond coupon payments this week.
We forecast the fair yields for the sukuk series to be auctioned today as follows: 5.80% (range: 5.75-5.85%) for 1-mo SPNS, 6.15% (range: 6.10-6.20%) for 6-mo SPNS, 6.20% (range: 6.15-6.25%) for 9-mo SPNS, 6.50% (range: 6.45-6.55%) for 2.2-yr PBS030, 6.56% (range: 6.51-6.61%) for 4.5-yr PBS040, 6.73% (range: 6.68-6.78%) for 7.4-yr PBSG002, 6.77% (range: 6.72-6.82%) for 13.1-yr PBS034, and 6.88% (range: 6.83-6.93%) for 23.6-yr PBS038.
