16 September 2025 (closed)
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Sharia-Compliant Bonds (Sukuk) in Indonesia: SR023 Offering Disappoints?
Sukuk Ritel SR023, which is a type of Sharia-compliant government bond that is issued by the government of Indonesia, somewhat disappointed as the target was not met when the offering period ended on 15 September 2025. It is interesting to take a closer look at what could be behind this disappointing bond issuance.
Based on data from the Director General of Financing and Risk Management under the Finance Ministry of Indonesia, the SR023 bond issuance only raised a total of IDR 18.73 trillion (approx. USD $1.15 billion), undershooting the target of IDR 20.0 trillion. The offering period for SR023 was from 22 August to 15 September 2025, and is only available for Indonesian citizens (this includes foreigners who permanently live in Indonesia).
SR023 is divided into two tranches: (1) three-year tenor, and (2) five-year tenor. As usual, the five-year tenor carries a higher (fixed) coupon rate (5.95 percent) to make it more attractive for investors to invest for a longer period. By investing in SR023, investors are lending money to the Indonesian government to fund development projects in a way that adheres to Islamic financial principles. These projects include various Green and Social projects across the country. The government, in turn, pays out fixed return (coupon) every month, providing a predictable and stable monthly income. This return is not regarded as interest (riba), but rather a rental payment for the leased asset in order to respect Islamic principles.
SR023 bond issuance (22 August - 15 September 2025):
| Funds Raised (IDR trillion) |
Number of Investors |
Coupon (fixed return) |
|
| SR023 (three year tenor) |
12.14 | 31,936 | 5.80% |
| SR023 (five year tenor) |
6.59 | 13,939 | 5.95% |
Source: Director General of Financing and Risk Management (Finance Ministry)
There are a couple of factors that are believed to have contributed to somewhat subdued demand for SR023.
Firstly, these are hectic political and economic times. Indonesia experienced big anti-government demonstrations in late-August 2025 and early September 2025 that triggered a cabinet reshuffle on 8 September 2025 through which Indonesian President Prabowo Subianto made more room for loyalists in his cabinet. This included the removal of Finance Minister Sri Mulyani Indrawati, a non-partisan technocrat who is highly regarded by markets for her prudent fiscal management. And so, this government change brought some uncertainty.
Secondly, since September 2024, Bank Indonesia has been gradually cutting its benchmark interest rate from 6.25 percent to 5.00 percent. This also impacts bond coupons, by pushing them down, making them less attractive for investors. Instead, stocks listed on the Indonesia Stock Exchange (including mutual funds) might become more interesting assets, particularly now a major stimulus package has been launched by the Indonesian government.
Thirdly, the lock-up period (minimum holding period) is also longer than usual, with investors only being able to trade this bond on the secondary market from 11 November 2025.
SR023 can be traded on the secondary market among domestic investors after a minimum holding period, giving flexibility in case one needs to sell the asset before it matures.
The principal investment and the monthly returns are fully guaranteed by the state through Indonesian law. This makes it a very low-risk investment, similar to a government-backed savings account.
Those who want to learn more about the background of the recent cabinet reshuffle can order the August 2025 report. This report discusses the underlying frustrations that triggered massive demonstrations in August 2025.
The report (an electronic report, PDF, in English) can be ordered by contacting us through email and/or WhatsApp:
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