Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds weakened again, with the 5Y yield (FR104) rising 12.3bps to 6.80% and the 10Y yield (FR0108) climbing 4.7bps to 6.77%, resulting in a flattening of the 5Y–10Y curve by 7.7bps, while the INDOBeX Composite declined 0.18%. Global sentiment remained focused on geopolitics after Chinese President Xi Jinping and Russian President Vladimir Putin strengthened strategic ties during talks in Beijing, signing around 40 cooperation agreements across trade, technology, and infrastructure. Both leaders also called for a comprehensive ceasefire in the Middle East, with Xi emphasizing that negotiations remain key to resolving the Iran conflict. Domestically, President Prabowo Subianto announced plans for the government to tighten control over Indonesia’s commodity exports, beginning with palm oil, thermal coal, and nickel products through a new state-controlled entity under Danantara. The policy is aimed at reducing under-invoicing, strengthening foreign exchange inflows, and supporting the rupiah, with Prabowo estimating that export “leaks” cost Indonesia up to USD150bn annually. Meanwhile, Bank Indonesia surprised markets by raising its benchmark rate by 50bps to 5.25% in May 2026, exceeding expectations, as the central bank moved to stabilize the rupiah and contain imported inflation risks amid heightened global volatility. On the fiscal side, the government continued to accelerate stimulus measures, with APBN spending rising 34.3% YoY to IDR1,082.8tn through April, driven by a 51.1% increase in central government expenditure to support domestic growth momentum. On the credit side, BAFI plans to repay its upcoming IDR240bn bond maturity using available external funding facilities supported by substantial undisbursed bank lines, while TUFI has fully repaid its IDR485.7bn bonds, leading to the withdrawal of the rating.