Indonesia Corporate Bond Spreads Widen To Six-Month High Amid Market Turmoil

Dollar-denominated corporate bonds from Indonesia experience their biggest spread expansion in half a year following a major stock market downturn.

By the end of trading on Tuesday, dollar-denominated Indonesian corporate bonds had gained 144 basis points above US Treasury bonds in average yield premiums. The current reading represents the most significant level since September 2024.

Since March 2025, corporate bond spreads have experienced a 16 basis point increase, yet they trail spreads from other Southeast Asian corporate bonds. The market shows a rising uncertainty about Indonesia’s economic standing as well as its impact on investor confidence.

Stock Market Decline And Investor Concerns

The Indonesian stock market’s main index suffered a substantial 7.1% decrease during day trading on Tuesday before showing minimal recovery throughout the rest of the session.

The sudden sharp market drop produced increased investor anxiety as they withdrew their investments from Indonesian corporate bonds.

Experts tracking the market have failed to determine what triggered the selling wave. The following elements serve as main causes of investor doubt:-

• Concerns over the populist policies of President Prabowo Subianto
• A baseless report spread that Finance Minister Sri Mulyani Indrawati would leave her position
• The implementation of new economic initiatives by the government is leading to increasing budgetary dangers.

The market turbulence resulted in foreign investors pulling ₹8,300 crore ($1 billion) from Indonesia’s domestic bond market on March 17, based on data from the finance ministry.

Global Ratings And Market Impact

The financial institution Goldman Sachs Group Inc. issued a negative evaluation regarding Indonesian asset performance last week. Goldman Sachs expressed worries about mounting fiscal dangers that stemmed from recent government expenditure programs.

Following this change, Goldman Sachs shifted its recommendation on Indonesian 10- to 20-year quasi-sovereign bonds from “favored” status to “neutral.”

The unstable bond market conditions had adverse effects on state-owned enterprises. On Tuesday, both PT Bank Negara Indonesia dollar bonds and PT Perusahaan Listrik Negara dollar bonds underwent strong market selling.