Global ratings agency Fitch Ratings anticipates a rapid expansion of Indonesia’s debt capital market (DCM), projecting it to reach an impressive US$800 billion, or approximately IDR 13.6 quadrillion (assuming an exchange rate of IDR 17,000 per US$), by the end of 2026. This significant growth is expected despite prevailing macro and domestic risks.
According to Fitch’s non-rating analysis, released on Wednesday, May 6, 2026, Indonesia is poised to maintain its position as one of the world’s largest markets for State Sharia Securities (SBSN) or sukuk. The nation is also set to remain a leading debt issuer among emerging markets (EMs) and within the ASEAN region.
The projected surge in the total DCM, aiming for the US$800 billion mark, is primarily fueled by government debt issuances. While domestic corporate debt issuance is also expected to increase, Fitch warns that corporate defaults or debt restructurings are likely to persist, posing ongoing challenges in this segment.
Overall, Fitch highlights several key risks within the debt market. These include domestic market volatility, often linked to concerns over capital market governance, and the potential impact of the Iran conflict on emerging market sentiment and global oil prices. Such factors are deemed capable of influencing issuance trends, potentially leading to increased capital outflow and higher funding costs for issuers.
These conditions could further pressure the rupiah, which hit a record low in April. Bashar Al Natoor, Fitch’s Global Head of Islamic Finance, noted in an official statement on Wednesday, April 6, 2026, that “Foreign investors are increasingly reducing their holdings of tradable domestic government bonds, which fell to below 13 percent by mid-April.”
Bashar explained that this trend reflects a prevailing risk-aversion sentiment, coupled with the rupiah’s depreciation and rising yields. This development also follows Fitch’s revision of Indonesia’s Outlook to Negative in March, signaling increased caution among investors.
Currently, Indonesia’s corporate debt market holds the distinction of being the fourth largest among emerging markets (excluding China) and the largest within the ASEAN region. Furthermore, Indonesian entities and companies collectively emerged as the largest global issuers of sukuk by the end of the first quarter of 2026, underscoring their significant role in the Islamic finance sector.
Total sukuk outstanding reached US$755 billion by the end of Q1 2026, marking a 5 percent year-on-year increase. Sukuk’s share of the overall market expanded to 17.5 percent, up from 16.8 percent in the first quarter of 2025, demonstrating its growing prominence.
However, overall sukuk issuance in the first quarter of 2026 amounted to approximately US$47 billion, representing a 6 percent decrease compared to the same period in the previous year. Additionally, liquidity for non-sovereign or corporate sukuk remains weaker when compared to sovereign sukuk, highlighting a disparity in market depth.
In a strategic move, the government has prioritized rupiah-denominated funding as part of its 2026–2030 debt strategy. This approach aims to effectively control debt risks associated with the appreciation of the US dollar, bolstering financial stability.
Fitch assigns a ‘BBB’ rating to nearly all of Indonesia’s sovereign-issued US dollar sukuk, categorizing them as investment grade with low default risk. For 30 rupiah-denominated sukuk issued by non-government entities, Fitch’s ratings span a range from ‘AAA’ to ‘A-‘, reflecting varying levels of creditworthiness within the domestic corporate landscape.
Pilihan Editor: Jika Rasio Bunga Utang Pemerintah Melampaui Batas Aman
Summary
Fitch Ratings projects that Indonesia’s debt capital market will reach US$800 billion by the end of 2026, largely driven by government debt issuances. The nation remains a leading global issuer of sukuk and holds a prominent position within the ASEAN debt market. This significant expansion is expected to continue despite risks related to corporate defaults and market volatility.
To ensure financial stability, the government is prioritizing rupiah-denominated funding to mitigate risks associated with US dollar appreciation. Recent trends show a decrease in foreign holdings of domestic bonds due to currency depreciation and global economic uncertainty. However, Indonesia’s sovereign US dollar sukuk continue to hold a ‘BBB’ investment-grade rating, reflecting a low risk of default.