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Jakarta Post

Despite rising trend, Indonesian corporate bond market ‘a dwarf’

Anton Hermansyah (The Jakarta Post)
Jakarta
Wed, December 21, 2016

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Despite rising trend, Indonesian corporate bond market ‘a dwarf’ Bonds grader: Credit ratings agency Pemeringkat Efek Indonesia (Pefindo) president director Salyadi Saputra (right) answers questions from journalists on the sidelines of the company's press conference in Jakarta on Dec. 20. (JP/Anton Hermansyah)

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he issuance of Indonesian corporate bonds has increased of late but compared to the total money market the number is small, a ratings agency has said.

Pemeringkat Efek Indonesia (Pefindo) president director Salyadi Saputra said outstanding corporate bonds were around US$21 billion, only 7.42 percent of $283 billion in outstanding bank loans. In Malaysia and Singapore, the ratio stands at 47.5 percent and 78 percent, respectively.

"We are even losing compared to Thailand and the Philippines, who have already reached 14.2 percent and 18.4 percent, respectively. Our local companies still rely heavily on banks," Salyadi said at a press conference at the Indonesian Stock Exchange (IDX) building in Jakarta on Tuesday.

Moreover, he added, 67.9 percent of outstanding corporate bonds were issued by banks and financing firms, meaning that the money obtained from the issuances would be transmitted into loans again.

"From January to November, 79.1 percent of Rp 104.18 trillion ($7.74 billion) in issuances came from banks and financing firms," he said.

Salyadi said in the last 10 years, Indonesian corporate bonds achieved annual growth rates of 11.35 percent. The rate is higher than in Malaysia and Singapore, but is still lower than in the Philippines and Thailand, with 25.89 percent and 12.34 percent per year, respectively. (evi)

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