Asian International Bond Markets – new report from ICMA


3 March 2021 The International Capital Market Association (ICMA) has today launched a new report on developments in Asian bond markets, supported by the Hong Kong Monetary Authority (HKMA).

Asian International Bond Markets: Development and Trends focuses on the international, offshore bond market in Asia, which is most easily accessible to international market participants. It looks at both primary and secondary markets, examining trends in issuance from China, India, ASEAN, and Japan as well as assessing the market structure and dynamics of bond trading in the region.

As domestic capital markets in Asia have matured, seasoned issuers have entered the international bond market in greater numbers, resulting in significant growth over the past 15 years. Issuance in the Asian international bond market amounted to USD 575 billion in 2020, a more than five-fold increase from 2006. However, cross-border issuance still accounts for only 20% of all the bond issuance in Asia, while 40% of global bond issuance is cross-border.

Martin Scheck, ICMA Chief Executive said: "Rising cross-border capital flows in Asian countries highlight the potential for a future pan-Asian bond market of a depth and size comparable with those of Europe and the US."

Much of this rapid development is due to Chinese issuers increasingly tapping the international bond markets. Recent years have also seen increasing issuance from countries where domestic markets have historically dominated, such as India and the ASEAN nations. Along with the growth of the markets, Asian financial centres and exchanges have also gained market share as the locations where cross-border bonds are arranged and listed, and Asian investors have become increasingly important in the primary distribution of Asian international bonds.

In secondary markets the report identifies an increase in the uptake of e-trading which has traditionally lagged behind US and European markets and a move to secondary market liquidity supply by a number of global banks that support flow trading on a pan Asian basis. Continuing illiquidity in the repo and securities lending markets limits the availability of financing for securities trading. However, sentiment remains positive, and investor demand for Asian bond issuance in the international market continues to grow.

The report draws upon extensive quantitative data from Bloomberg, Dealogic, EquiLend, IHS Markit and MarketAxess, as well as qualitative research and interviews with market participants.

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