Improved Rating, US Dollar Government Bond Yields Fall

Standard & Poor's (S&P) Global's upgrade of Indonesia's sovereign debt rating to BBB-, bringing it into investment-grade territory on May 19, 2017, led to a decrease in [investment risk perception in the domestic financial market](https://databoks.katadata.co.id/datapublish/2018/01/11/peringkat-membaik-risiko-investasi-indonesia-terus-turun). This, coupled with stable domestic economic growth and Fitch Ratings' subsequent upgrade of Indonesia's rating to BBB, further spurred an inflow of foreign investment.

On January 25, 2018, the yield [return] (https://databoks.katadata.co.id/datapublish/2017/09/29/imbal-hasil-obligasi-pemerintah-indonesia-masih-menarik) on 10-year US dollar-denominated Indonesian bonds stood at 3.61%. This figure represents a decrease of 23 basis points (bps) from the level observed the day before S&P's upgrade to investment grade. Similarly, Indonesia's investment risk perception (Credit Default Swap/CDS) also fell by 58.88 points to 143.7, down from 202.58.

For context, foreign investors held Rp 742.65 trillion (38.73%) of Indonesian government bonds on May 18, 2017. However, by January 23, 2018, this had increased to Rp 880.2 trillion, a rise of 18.7%. The proportion of foreign ownership also increased to 41.1% of the total.

(Read Databoks: [Rp 849 Trillion of Government Bonds Held by Foreigners](https://databoks.katadata.co.id/datapublish/2018/01/08/rp-849-triliun-surat-utang-negara-dikuasai-asing))

(Read Databoks: [3 Years of Jokowi-JK: Government Foreign Debt Up 35 Percent](https://databoks.katadata.co.id/datapublish/2017/10/19/3-tahun-jokowi-jk-utang-luar-negeri-pemerintah-naik-35-persen))