Indonesia’s government bond market is sending a clear message: investor confidence in the country’s economic stability is on the rise. With 10-year yields on Surat Berharga Negara (SBN) reaching their lowest level in two decades, both domestic and foreign investors are signaling trust in Indonesia’s fiscal discipline and macroeconomic outlook. This trend reflects deeper structural resilience and positions Indonesia favorably in the global financial landscape.
Key Facts & Background
- Finance Minister Purbaya Yudhi Sadewa highlighted that the 10-year SBN yield has declined to around 5.9%, the lowest in 20 years.
- The drop in yields is interpreted as a sign of strong investor confidence in Indonesia’s economic fundamentals.
- As of October 16, 2025, Bank Indonesia reported the 10-year SBN yield at 5.94%.
- On the same date, the U.S. 10-year Treasury yield stood at 3.975%, narrowing the yield spread to 197 basis points.
- From January to mid-October 2025, foreign investors recorded a net purchase of Rp17.28 trillion in the SBN market.
- In contrast, net sales were recorded in the equity market (Rp51.24 trillion) and Bank Indonesia’s SRBI instruments (Rp132.75 trillion).
- Total outstanding SBN as of September 2025 reached Rp6,592 trillion, comprising:
- Surat Utang Negara (SUN): Rp5,301 trillion
- Surat Berharga Syariah Negara (SBSN): Rp1,290 trillion
- SUN breakdown:
- Long-term government bonds: Rp5,243 trillion
- Short-term treasury bills (SPN): Rp58.7 trillion
- SUN ownership distribution:
- Private national banks: Rp526 trillion
- State-owned banks: Rp316.5 trillion
- Foreign banks: Rp74.9 trillion
- SPN ownership:
- State-owned banks: Rp3.45 trillion
- Foreign banks: Rp2.58 trillion
Strategic Insights
The sustained decline in Indonesia’s SBN yields reflects a convergence of macroeconomic stability, prudent fiscal management, and growing investor trust. In fixed-income markets, lower yields typically signal reduced risk perception and heightened demand—especially when accompanied by strong fundamentals. Indonesia’s ability to attract net foreign inflows into its bond market, despite outflows in equities and central bank securities, underscores its appeal as a safe and stable investment destination.
The narrowing yield spread between Indonesian SBNs and U.S. Treasuries is particularly noteworthy. It suggests that investors are increasingly comfortable with Indonesia’s sovereign risk profile, even as global interest rates fluctuate. This confidence is likely anchored in Indonesia’s consistent inflation control, disciplined budget execution, and credible monetary policy. As global investors seek yield in emerging markets, Indonesia’s improving creditworthiness and transparent debt management offer a compelling case.
From a fiscal perspective, the composition and ownership of SBNs reveal a diversified and resilient investor base. The dominance of domestic banks—both private and state-owned—provides a buffer against external volatility, while foreign participation adds depth and liquidity to the market. The growing share of long-term instruments also reflects a shift toward more sustainable debt structuring, reducing rollover risk and enhancing fiscal flexibility.
Strategically, low SBN yields can translate into lower borrowing costs for the government, enabling more efficient financing of development priorities. This includes infrastructure, education, healthcare, and green transition initiatives. Moreover, the credibility gained through stable yields can support broader economic goals, such as currency stability, investment attraction, and sovereign rating upgrades.
However, maintaining this trajectory requires continued vigilance. Global financial conditions remain fluid, and emerging markets are susceptible to capital flow reversals. Indonesia must therefore sustain its reform momentum—particularly in tax policy, public spending efficiency, and institutional governance—to preserve investor confidence. Enhancing transparency and deepening the domestic bond market will also be key to long-term resilience.