Jakarta. Indonesia’s corporate bond issuance is projected to reach between Rp 154 trillion and Rp 196.86 trillion ($9.17 billion–$11.7 billion) in 2026, supported by strong refinancing needs and more competitive funding costs, according to local rating agency Pefindo.

Suhindarto, Head of Economic Research at credit rating agency Pemeringkat Efek Indonesia (Pefindo), said the outlook reflects solid long-term funding demand, a recent decline in bond yields, and improving cost in the domestic debt market.

The forecast follows a record year in 2025, when corporate bond issuance hit Rp 244.3 trillion, surpassing the previous high of Rp 185 trillion set in 2017.

“The surge was driven by refinancing needs, relatively more expensive bank financing, and issuers’ strategy to secure long-term funding amid declining funding costs,” Suhindarto said at a press conference on Wednesday.

Total debt securities issuance in 2025 reached Rp 284.3 trillion, up 89.9% from 2024. Corporate bond issuance climbed to Rp 219.1 trillion, while medium-term notes (MTNs) jumped to Rp 62.7 trillion from just Rp 1.5 trillion a year earlier. Issuance of asset-backed securities and commercial papers also increased to Rp 2.5 trillion from Rp 0.5 trillion.

The 2025 rally was underpinned by a decline in benchmark yields after Bank Indonesia cut its policy rate five times, lowering effective coupons, particularly on three-year tenors.

Yield compression was evident across nearly all rating categories, including the BBB segment, where yields have approached average bank lending rates. As a result, many issuers opted for longer tenors to lock in lower borrowing costs.

The sharpest yield decline occurred in AAA-rated bonds, prompting top-tier issuers to capitalize on cheaper funding. AAA-rated issuance accounted for 58% of total issuance in 2025, soaring to Rp 164.96 trillion from Rp 58.9 trillion a year earlier.

By sector, holding companies led issuance with Rp 69.3 trillion, followed by banks at Rp 41.7 trillion, multifinance firms and pulp and paper companies at Rp 33.2 trillion, as well as mining companies. Pefindo rated Rp 189.7 trillion of the total issuance, with the largest share coming from banking, pulp and paper, mining and multifinance.

State-owned enterprises (SOEs) and private companies contributed relatively evenly to issuance volumes, although SOE-related issuance reached Rp 337.5 trillion, compared with Rp 146.8 trillion from the private sector.

Looking ahead to 2026, Suhindarto said refinancing demand remains substantial at Rp 162.72 trillion, providing a strong pipeline for new issuance.

The outlook is also supported by resilient economic fundamentals, expansionary fiscal and monetary policies, the potential for one to two additional rate cuts, declining corporate leverage that could reduce risk premiums, and investor rotation from government bonds into higher-yielding corporate debt in a lower-rate environment.

However, risks persist. Suhindarto pointed to rising geopolitical tensions since January, including developments in Greenland, the Middle East, Iran and the Russia–Ukraine conflict, which could affect global risk sentiment.

A weaker rupiah could also trigger imported inflation and limit further yield declines. Meanwhile, heavy government bond issuance may crowd out corporate debt and cap yield compression, while slower business activity in the banking and multifinance sectors could constrain new issuance.

Investor preference for higher-rated securities — particularly single-A and above — may also weigh on lower-rated issuers in the BBB segment. Companies could turn to equity markets instead if Indonesia’s benchmark stock index posts stronger performance, he added.

As of Jan. 31, Pefindo had received mandates from 43 companies planning to issue Rp 71.35 trillion in debt securities that have yet to come to market. The largest planned issuance comes from the multifinance sector at Rp 17.65 trillion, followed by pulp and paper (Rp 8.9 trillion), banking (Rp 7.7 trillion), holding companies (Rp 6 trillion) and the chemical industry (Rp 4.5 trillion).

Private companies dominate the pipeline with 35 entities planning Rp 57.9 trillion in issuance, while eight SOEs and regional government-owned enterprises account for Rp 13.44 trillion. Most planned deals are structured as public bond offerings and sukuk.