KONTAN.CO.ID - JAKARTA/SINGAPORE, July 21 - Indonesia will issue Chinese yuan-denominated bonds, also known as panda bonds, on July 23 and expects to raise $1 billion, Finance Minister Purbaya Yudhi Sadewa said on Tuesday.

The government has assigned Bank of China as the lead underwriter and lead bookrunner, Purbaya told reporters in a press conference.

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China's rating agency Lianhe Rating Co Ltd has assigned an AAA/Stable rating for Indonesia's maiden panda bonds, Purbaya said.

"This is a new market although the bids may be very high, we are capping it at $1 billion. If necessary, we will issue a larger amount," Purbaya said.

According to a mandate sheet reviewed by Reuters, CICC , CITIC Securities, DBS Bank China and ICBC have been mandated as joint lead underwriters and joint bookrunners.

The transaction is subject to market conditions.

Indonesia is rated "Baa2" by Moody's, "BBB" by both S&P Global and Fitch Ratings. It also holds an "AAA" onshore rating from Chinese agency Lianhe, according to the document.

The sovereign issue will include a 5 billion yuan ($739.07 million) 3-year tranche and a 2 billion yuan ($295.63 million) 5-year tranche, according to a separate sheet seen by Reuters.

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The bookbuilding period is set for July 23, with settlement due on July 30, according to the sheet.

Panda bonds are yuan bonds sold in mainland China by foreign issuers. ($1 = 6.7653 Chinese yuan renminbi)