Governments in Asia should continue to develop their domestic bond markets and the Asian Development Bank (ADB) stands ready to support those efforts, said Bindu Lohani, vice president of finance and administration at ADB.
Speaking at the opening of the fourth annual Asian Bond Markets Summit in Singapore, he pointed to the need to increase issuance of local currency bonds, take measures to encourage institutional and foreign investors to buy Asia’s bonds and to improve regulatory and policy frameworks so investors are comfortable investing in the region’s markets.
For its part, ADB has completed many issues since 1970 when it sold its first Samurai bonds in Japan. Its issuance in the local markets in Australia, the People’s Republic of China, India, Republic of Korea, Malaysia, the Philippines, Taipei, China and Thailand have helped lead the way for others to follow.
Benchmark issues by the ADB can set a pricing yardstick for other borrowers who can also use similar structuring mechanisms to sell their own deals in the local markets. At the same time, ADB claimed that the bonds provide additional variety for local bond investors.
ADB is also holding discussions with a number of Asian countries to include more currencies in the $10 billion Asian currency note program that ADB established in September 2006. The program is dedicated to issuance of medium-term note issuance in local currencies.
Mr Lohani said: “Our aim should be to better balance financial intermediation at home – improving returns on domestic assets rather than locking excessive amounts in low-yielding assets abroad.
“Robust local capital markets are essential to diversify the sources of funding necessary to support long-term investments and sustain high growth levels. This is not easy and it will take time. But we hope that – together – we can achieve these goals.”
