TheJakartaPost
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The rise of bond financing
Many analysts argue that 2017 was a spectacular year for bond financing. Data from the Indonesia Stock Exchange (IDX) show that the issuance of corporate bonds reached Rp 161.4 trillion in 2017, a yoy 40.2-percent increase compared to Rp 115.1 trillion in 2016.
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A trading floor of Indonesia Stock Exchange (IDX) building. (JP/Wienda Parwitasari)
D
espite the improving financial performance of local corporations, credit growth is still having some difficulties taking off. Credit provided by banks only managed to grow by 8.1 percent in 2017, continuing the declining trend in the last couple years.
This situation raises an important issue: Even though the economy has started to recover, why have bank loans not shown significant improvements? Historically, particularly during the boom economic period (such as 2010-2013), loan growth always managed to grow two or three times gross domestic product (GDP) growth.
In recent years, however, the gap between the two indicators is narrowing, as indicated by the 2017’s year-on-year (yoy) credit growth of 8.1 percent compared to the expected GDP growth of around 5 percent
One plausible explanation for this situation is attributable to the growing of bond financing. Many analysts argue that 2017 was a spectacular year for bond financing. Data from the Indonesia Stock Exchange (IDX) show that the issuance of corporate bonds reached Rp 161.4 trillion in 2017, a yoy 40.2-percent increase compared to Rp 115.1 trillion in 2016.
