Jakarta. Indonesia has received a top-tier AAA credit rating with a stable outlook from Lianhe Credit Rating ahead of its inaugural Panda Bond issuance in China's domestic bond market, Finance Minister Purbaya Yudhi Sadewa said on Tuesday.

The AAA rating, the highest available on China's domestic credit rating scale, is expected to strengthen investor confidence as Indonesia prepares to launch the offering on July 23.

The government plans to raise $1 billion through the debut issuance, although the initial offering has been deliberately capped despite expectations of strong demand.

"Because this is a new market for us, we want to test it first, even if demand turns out to be very strong. We'll limit the first issuance to $1 billion, and if necessary, we can return to the market several months later with a larger offering," Purbaya told a press conference.

Before the planned issuance, Indonesia's Panda Bond underwent a credit assessment by Lianhe Credit Rating, one of China's leading domestic credit rating agencies.

"Lianhe Credit Rating is a highly respected credit rating agency in China. An AAA rating with a stable outlook is the highest rating available," Purbaya said.

He added that the top rating would make it easier for Indonesia to market the bonds to Chinese investors, highlighting the country's vast debt market as a promising new source of financing.

"China has a massive bond market. Its capital market offers enormous financing capacity, and with an AAA rating, we should not face significant difficulties in issuing debt there," he said.

For the inaugural issuance, Bank of China has been appointed as the lead underwriter. Industrial and Commercial Bank of China (ICBC), China International Trust and Investment Corporation (CITIC), China International Capital Corporation (CICC), and DBS will serve as joint lead underwriters and joint bookrunners.

Several other major Chinese banks will participate as co-managers. According to Purbaya, the involvement of multiple leading financial institutions reflects strong market interest and confidence in Indonesian government debt securities.

The Panda Bond marks Indonesia's first issuance of renminbi-denominated sovereign bonds in China's onshore market.

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