Mandiri Sekuritas Warns of Exchange Rate Risks in Issuing Panda Bonds

JAKARTA, KOMPAS.com - PT Mandiri Sekuritas assesses that the government’s plan to issue panda bonds amid economic uncertainties carries risks that need to be anticipated. Head of Fixed Income Research at Mandiri Sekuritas, Handy Yunianto, stated that issuing bonds in foreign currencies, including the Chinese yuan, has the potential to increase exchange rate risks. “The risk is certainly there; if we always want to issue in currencies outside the domestic one, there is a current series risk,” he said during the Bank Mandiri Macro and Market Brief Q2-2026 presentation on Monday (11/5/2026). However, Handy believes that Indonesia’s substantial trade relations with China can serve as a natural hedge to help suppress the exchange rate risks from issuing panda bonds. “But if we look at Indonesia having quite a lot of counterparts with China, hopefully there is a natural hedging that can mitigate that risk,” he added. Nevertheless, Handy views the issuance of panda bonds as a strategic step to diversify the government’s funding sources amid the large bond issuance needs in 2026. This is because the government needs to increase the portion of global bond issuances to reduce the risk of crowding out, or the absorption of liquidity in the domestic market due to high issuance of government debt securities. “This year 2026 is indeed a challenge for the government to issue bonds on a fairly large scale domestically. So one way to mitigate the crowding out risk is to try issuing a larger portion of global bonds,” he explained. “Previously, we always relied on the US dollar, euro, Japanese yen. Now we have Australia, panda, dimsum. This is one diversification strategy,” he said.