Fitch Forecasts Indonesia Debt Market to Hit US$800 Billion

6 hours ago 2

TEMPO.CO, Jakarta - Global credit rating agency Fitch Ratings projects that Indonesia’s debt capital market (DCM) will expand rapidly to around US$800 billion, or approximately Rp13.6 quadrillion (based on an exchange rate of Rp17,000 per US dollar), by the end of 2026, despite ongoing macroeconomic and domestic risks.

In a non-rating analysis released on Wednesday, May 6, 2026, Fitch said Indonesia is expected to remain one of the world’s largest markets for sharia-compliant securities, or sukuk (SBSN), while also ranking among the leading debt issuers in emerging markets and the ASEAN region.

The projected growth in the DCM, which is expected to surpass US$800 billion, is largely driven by government borrowing. Corporate debt issuance is also forecast to increase, although risks of defaults and debt restructuring are likely to persist.

Fitch noted that key risks to the market include domestic volatility linked to concerns over capital market governance, as well as external pressures such as the conflict involving Iran, which could weigh on emerging market sentiment and oil prices. These factors may influence issuance trends, trigger capital outflows, and push up financing costs.

Such pressures have also weighed on the rupiah, which hit a record low in April. “Foreign investors are increasingly reducing their holdings of tradable domestic government securities, falling to below 13 percent in mid-April,” said Bashar Al Natoor, Fitch’s Head of Global Islamic Finance, in a statement.

According to Bashar, the trend reflects heightened risk aversion, rupiah depreciation, and rising yields, following Fitch’s decision to revise Indonesia’s outlook to Negative in March.

Indonesia’s corporate debt market currently ranks as the fourth largest among emerging markets (excluding China) and the largest in ASEAN. Indonesian issuers have also become the world’s leading sukuk issuers as of the first quarter of 2026.

Outstanding sukuk reached US$755 billion at the end of the first quarter, marking a 5 percent year-on-year increase. Sukuk accounted for 17.5 percent of the total market, up from 16.8 percent in the same period last year.

However, total sukuk issuance in the first quarter stood at around US$47 billion, down 6 percent compared to a year earlier. Liquidity in the non-sovereign, or corporate, sukuk segment remains weaker than in the sovereign market.

The government continues to prioritize rupiah-denominated financing under its 2026–2030 debt strategy, aiming to mitigate risks associated with US dollar volatility.

Fitch assigns most Indonesia’s US dollar-denominated sovereign sukuk an investment-grade rating of ‘BBB’, indicating relatively low default risk. Meanwhile, around 30 rupiah-denominated corporate sukuk are rated between ‘AAA’ and ‘A-’.

Read: Indonesia to Issue Panda Bonds in China to Cut Dollar Reliance

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