Analysis: BMRI’s bond issue: Himbara’s government financing under scrutiny

Perpetual bonds issued by the state-owned Bank Mandiri (BMRI) have been drawing attention due to concerns over the bank's capital position and potential financial demands linked to government financing. BMRI recently raised US$750 million in bonds with a 7.35 percent initial distribution rate, significantly higher than comparable corporate bonds.

This higher yield may be attributed to the uncertainties surrounding perpetual bonds and the absence of a fixed maturity date, which leaves investors uncertain about when they will receive their principal back.

These concerns are heightened by the government's increasing reliance on Himbara banks for financing various programs, including the Red and White Cooperatives initiative and the free nutritious meal program. The Red and White Cooperatives initiative involved a borrowed amount of Rp 240 trillion (US$13.4 billion) from Himbara banks, with repayment terms over six years. However, the first repayment instalment, due on Sept. 25, 2026, has been delayed due to government verification processes.

Himbara banks have also been engaged in the government's free nutritious meal program, contributing to the construction of kitchens for programme service providers. While the bank's capital adequacy ratio (CAR) has faced challenges, with it standing at 17.52 percent in June 2026, well below its peers, there is a need to analyze how the bank's expanding financing commitments could impact its capital position.