THE CREDIT RISK DYNAMICS OF INTERNATIONAL BONDS: THE INDONESIAN CASE
Abstract
The objective of this paper is to test how market-determined local-, global- and USbased
factors explain the behaviour of Indonesian credit spreads. Using a specific
asset class of bonds issued in the international market by the Indonesian government,
this paper provides evidence confirming the importance of major local and global
macroeconomic variables in pricing risky debt issued by Indonesia. Using US dollar–
denominated bonds ranging from shorter- to longer-maturity groups, this study
provides insights into the role of these determinants in the pricing process. Given
the implications for pricing and risk management, the evidence from this study is
important for investors, policymakers, and issuers.
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Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
