Manama/Jakarta: Indonesia is likely to remain one ofthe world’s largest sukuk issuers and a major emerging markets (EM) debt issuer in 2026. The debt capital market (DCM) will likely reach USD800 billion outstanding by end-2026, mainly sovereign-driven given it plans to front-load spending in 1H26 and high funding needs for key programmes. Fitch projects general government debt to rise to 41% of GDP in 2026 (2025: 40.5%). Our baseline expects the debt ratio to remain broadly stable over the medium-term, although we see rising policy uncertainty and an erosion of policy mix consistency,” Fitch in its latest report, said.
“Indonesia’s 2026–2030 debt strategy focuses on the domestic market, with at least 70% of new issuance in rupiah, in line with historical trends, and to cap the foreign-currency debt at 35% of total debt outstanding. Key risks include domestic market volatility linked to capital market governance concerns, as well as the impact of the Iran war on EM sentiment and oil prices. This could affect issuance, raise capital outflow and funding costs, and add pressure on the rupiah, which fell to a record low in April. A China slowdown, Indonesia’s key export partner, could also weigh on DCM.”
Fitch rates 96% of US dollar Indonesian sukuk outstanding as of end-1Q26, issued by the sovereign and rated ‘BBB’. Fitch recently revised Indonesia’s Outlook to Negative in March. Rupiah sukuk represent about 2% of Fitch-rated Indonesian sukuk outstanding or about IDR9.5 trillion across 31 sukuk, all were issued by non-sovereign entities and National Ratings ranging from ‘A-(idn)’ to ‘AAA(idn)’. Most have Stable Outlooks, rest Positive, and no rated defaults. “Indonesia’s DCM outstanding is the largest in ASEAN and the fourth largest among Ems excluding China, reaching USD755 billion by end-1Q26, up 5% yoy. Sovereign debt remained dominate, while sukuk share growing to 17.6% of the total (1Q25: 16.8%). Debt issuance in 1Q26 was about USD47 billion, down 6% yoy and 42% qoq, amid macro volatilities and a sharp rise in borrowing in 4Q25. Indonesian entities were the largest sukuk issuers globally, with rupiah sukuk issuance ranking second after the US dollar. In April, the government issued samurai bonds.”
“We continue to expect stronger onshore non-financial corporate note issuance than offshore issuance as issuers seek to mitigate currency risks amid exchange-rate volatility. Sukuk will continue to expand after reaching a five-year high in 2025. Missed payments or successive restructurings are likely to remain prevalent in 2026. Demand Dynamics: Foreign investors held 12.7% of tradeable domestic government securities as of mid-April, extending the decline seen in recent years (end-2025: 13.4%, 2018: 40%). Bid-to-cover ratios for government securities in the primary market fell to 1.57x in 3M26 (12M25: 3.18x; 1M26: 2.68x; 2M26: 2.03x), alongside rupiah depreciation, rising yields and risk-off sentiment,” Fitch in a latest report, said.
Liquidity of rated Indonesian sovereign USD sukuk was resilient but weakened amid volatilities. Its average Bloomberg liquidity score fell to 68.4 in early April (1M26: 81.6). The score ranges from 1 to 100, with 100 being the most liquid. Liquidity of non-sovereign rated sukuk remained weak, at average liquidity score of 19.3.”
