Total Indonesian corporate bond issuance is forecast to reach nearly 90 trillion rupiah ( US$5.5 billion ) in 2025, up from 73 trillion rupiah in 2024, with the country’s onshore non-financial corporate bond issuance having experienced a remarkable year-on-year growth of 54% in the first half of 2025. Sukuk issuance is expected to achieve its highest full-year level in the past five years, signalling a shift in corporate financing trends, according to a recent report.

Sukuk issuance in the first half of 2025 saw remarkable growth, more than tripling year on year to 14 trillion rupiah, surpassing the total sukuk issuance of 12 trillion rupiah for all of 2024, finds the Fitch Ratings report. Sukuk accounted for 32% of total onshore bond issuance during H1 2025, a significant jump from the 15% to 16% share recorded between 2022 and 2024.

Within the sukuk bond market, pulp and paper companies remain the dominant issuers, the report details, contributing 52% of issuance in the first half of this year, up from 48% in all of 2024. And in H1 2025, coal miners and mining contractors – key contributors to sukuk issuance in 2024 as well – accounted for 20%.

The sukuk market is also seeing new participants in 2025, with several prominent corporates issuing sukuk for the first time, among them:

• Bukit Makmur Mandiri Utama ( one of Indonesia’s largest independent coal mining contractors )
• Tower Bersama Infrastructure ( one of the country’s largest telecommunications tower providers )
• Merdeka Battery Materials ( an electric vehicle battery material supplier ).

Corporates have increasingly turned to longer-tenor notes to lock in attractive borrowing costs, following the central bank’s 100 basis points of policy rate cuts since the third quarter of 2024. Notes with tenors of three years or more accounted for 42% of total issuance in the first half of this year, according to Fitch Ratings, the highest proportion since 2020.

The average size of sukuk issuances has risen significantly, reflecting its potential as a viable alternative for funding and refinancing. The average sukuk issuance size, Fitch Ratings estimates, increased to approximately 900 billion rupiah in H1 2025, compared with less than 500 billion rupiah in 2020. Notably, Bukit Makmur Mandiri Utama’s 2-trillion-rupiah sukuk issuance in the first quarter of 2025 stands out as one of the largest single issuances by a non-financial corporate.

The robust growth of Indonesia’s sukuk market highlights the increasing appetite for Shariah-compliant financial instruments among both issuers and investors. Local bonds and bank loans continue to be the primary funding sources for Indonesian corporates.

Offshore issuance remains challenging due to global economic uncertainties, currency risks and changes in US tariffs. Sectors with high capital expenditure needs, such as pulp and paper, telecommunications towers and mining-related industries, are expected to maintain their leadership in onshore corporate financing.