Jakarta. Indonesia has postponed the launch of its inaugural Panda Bond from early July to the end of the month after strong interest from Chinese investors prompted requests for additional time to complete internal investment approvals.

Finance Minister Purbaya Yudhi Sadewa said Friday that several Chinese asset managers and major banks needed more time to submit investment proposals to their respective investment committees before participating in the bond offering.

"They asked us to delay the issuance slightly so they have enough time to obtain approval from their investment committees," Purbaya told reporters during a media briefing in Jakarta. "I think this is a good sign because it shows the interest is quite strong."

The government had initially planned to issue the yuan-denominated bonds in early July and is targeting an offering size of around $1 billion, equivalent to about Rp 17.9 trillion. However, Purbaya said the final amount remains flexible and could be increased if demand proves stronger than expected.

"If the market can absorb a larger amount, we can increase the issuance above our original plan," he said, adding that Chinese investors had shown strong enthusiasm during recent meetings.

Panda Bonds are debt securities issued by foreign borrowers in China's domestic bond market and denominated in yuan. For Indonesia, the issuance forms part of a broader strategy to diversify funding sources and reduce reliance on US dollar-denominated debt.

The government is also exploring the use of the Local Currency Transaction (LCT) framework in the issuance. Under the arrangement, investors would pay in renminbi, while the proceeds could be converted directly into rupiah through cooperation between the central banks of Indonesia and China.

"That would reduce our dependence on the US dollar and lessen pressure on the rupiah," Purbaya said. The rupiah has weakened by 7% to Rp 17,830 per US dollar so far this year.

Acting Director General for Financial Sector Stability and Development Herman Saheruddin said the Panda Bond is intended to broaden the government's financing base and reduce exchange-rate risks facing the state budget.

"If we rely too heavily on the US dollar, the budget becomes more vulnerable to currency fluctuations," Herman said. "Diversification helps reduce those risks."

He said China represents an attractive market because investors there are willing to buy Indonesian sovereign debt at yields that reflect the country's economic fundamentals.

According to Purbaya, Chinese investors tend to rely more heavily on domestic credit rating agencies rather than global agencies such as S&P Global Ratings or Moody's when assessing Panda Bonds. The bond's local credit rating is expected to be published shortly before the offering.

Indonesia has been seeking to diversify its funding sources amid global market volatility and a stronger US dollar, while also promoting greater use of local currencies in cross-border transactions.

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