Asia US dollar bond issuance hits record in 2017 as demand moves from America
New dollar debt issuance in Asia excluding Japan, has jumped 40pc to US$377b from 2016, says Thomson Reuters
Asian US dollar-denominated bond issuance has hit a record this year, driven by greater liquidity and demand from investors in the region, as subscriptions shifted away from the traditional American market.
Even as local Asian governments from China to India push for the development of their own debt markets, the expanding pool of investors want more exposure to the US dollar as they search for diversification, higher returns and lower risks amid fundamental improvement in the region, analysts said.
Total new issuance of dollar bonds by Asia-Pacific companies excluding those in Japan climbed to a record high of US$377 billion this year, up 40 per cent from 2016 and four-and-a-half times in the past decade, according to Thomson Reuters data.
The rise comes on the back of a low interest rate environment and a weak US dollar resulting in narrower credit spreads – conditions favourable to issuers to sell debt.
Even with expectations of the US Federal Reserve raising interest rates by two or three times next year, levels would stay considerably below historical averages, encouraging healthy bond activity, analysts said.
ANZ Bank predicts the size of the dollar debt market for Asia excluding Japan to reach a total value of US$1 trillion by 2020.
