Banks Ready to Absorb Regional Bonds, Seen as a New Innovation

Director of Finance & Treasury at Bank NTT, Heru Helbianto, said that from the perspective of investors and market participants, regional bonds hold attractive prospects. He noted that the banking sector sees opportunities for collaboration to support the sustainability of regional government strategic projects.

“We in the financial industry, particularly banking, greatly anticipate alternatives and diversification for our investments. As representatives of banks, we are eagerly awaiting the issuance of municipal bonds and it will be strongly supportive in line with our capabilities,” Heru said in a written statement on Thursday, 21 May 2026.

Heru explained that one factor making regional bonds attractive to banks is their liquidity security. He assessed that the instrument possesses characteristics similar to government securities (SUN) because it is issued by the government.

“From my treasury experience, the first thing we always look at is risk. For these regional bonds, we see the liquidity risk will be very good and maintained because the guarantee is the state or government, so as long as the state does not go bankrupt, investors will be very confident,” he said.

In addition to offering investment security, regional bonds are also seen as advantageous from a banking regulatory perspective. The instrument carries a low risk weight in the calculation of risk-weighted assets (RWA) for banks, helping to keep financial health ratios manageable in day-to-day operations.

“In terms of regulations, government bonds carry a very low risk weight in ATMR/RWA calculations for banks. Therefore, the financial health ratios that banks must maintain will become more manageable in daily operations,” he explained.

Heru also projected that investor interest in regional bonds would be more oriented toward medium tenors. Based on current market trends, tenors of 3 to 5 years are judged to be the most in demand by institutions and the public.

“To illustrate future strategy, at present the most favoured bond tenors and the targets for both the public and institutions are 3 and 5 years,” he said.

Through the issuance of regional bonds, Bank NTT hopes that financing of regional infrastructure projects can proceed more optimally without liquidity issues caused by fluctuations in regional revenues. The partnership between local governments as issuers and banks as market players is expected to drive economic growth and improve the welfare of the people.