<![CDATA[Regional bonds are one of the financing instruments available for regional governments to support infrastructure development and public service provision. This study aims to analyze the legal standing of regional bonds as an infrastructure financing instrument following the enactment of Law Number 1 of 2022 concerning the Financial Relations between the Central Government and Regional Governments, specifically for underdeveloped, outermost, and frontier regions. It also identifies the legal consequences of default and assesses the validity of seizing regional assets through the Commercial Court. The method used is normative legal research, which examines statutory regulations and legal doctrines. The analysis technique is conducted qualitatively using legal dogmatics and legal policy approaches to untangle the conflict of norms between bankruptcy law and state finance law. The results indicate that the new regulation restructures regional bonds into independent regional debt financing, placing them on equal footing with conventional loans. A default scenario leads to breach of contract, capital market administrative sanctions, credit rating downgrades, and the implementation of a direct intercept mechanism on transfer funds by the central government. Furthermore, the seizure of regional assets through the Commercial Court is legally invalid and unenforceable as it violates the principle of sovereign immunity from execution under state treasury law and conflicts with the prohibition against pledging regional property under the central-local financial relations law. ]]>
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