Jakarta. Indonesia has raised 7 billion yuan ($1.03 billion) through its inaugural Panda Bond issuance in China's domestic bond market, as the government seeks to diversify its funding sources and broaden its foreign investor base.

The offering, completed on Thursday, comprised 5.6 billion yuan of three-year notes priced at a 1.9% yield and 1.4 billion yuan of five-year notes carrying a 2.19% yield.

Director General of Budget Financing and Risk Management Suminto said the issuance supports Indonesia's strategy to diversify financing instruments while strengthening access to China's capital market.

"The issuance of yuan-denominated Panda Bonds is highly strategic, given China's role as one of Indonesia's largest trading and investment partners," Suminto told Jakarta Globe's sister publication Investor Daily. "It is also aligned with the rapid expansion of local currency transaction cooperation between the two countries."

The offering attracted 17 billion yuan in orders, or 2.4 times the amount issued, reflecting strong investor demand.

Orders for the three-year tranche reached 12.38 billion yuan, resulting in a 2.2-times bid-to-cover ratio, while the five-year tranche received 4.62 billion yuan in subscriptions, equivalent to a 3.3-times bid-to-cover ratio.

Suminto said the robust demand and competitive yields underscored investor confidence in Indonesia's economic fundamentals and fiscal management. He added that the issuance also benefited from an AAA rating with a stable outlook assigned by China Lianhe Credit Rating Co., Ltd.

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