According to ADB, there were $1.556 trillion in corporate bonds outstanding at the end of September, 23.8% more in local currency terms than a year earlier and 5.7% more than at the end of June.
Iwan Azis, head of ADB’s Office of Regional Economic Integration, which produced the report, said that the companies are taking the opportunity to raise money in Asia’s local currency bond markets because of the growing demand from investors, particularly overseas investors.
"Foreign interest has risen, given Asia’s favorable growth fundamentals, lower interest rates in mature markets, and despite administrative measures in some countries to limit capital inflows," Azis added.
Local currency government bonds in emerging East Asia totaled $3.55 trillion, 14.6% higher year-on-year and 1.9% higher quarter-on-quarter. The slower growth came with many countries now paring their fiscal stimulus packages and with some central banks opting to slow sterilizing bond sales, according to the report.
Emerging East Asia comprises the People’s Republic of China (PRC); Hong Kong, China; Indonesia; Republic of Korea; Malaysia; Philippines; Singapore; Thailand; and Vietnam.
The fastest growing corporate bond markets at the end of September were the PRC and Indonesia, both of which grew 10.9% on a quarter-on-quarter basis, followed by Singapore’s corporate bond market, which grew 7.1% quarter-on-quarter.
"What we are seeing is a fundamental change in the investor make-up in emerging East Asia’s bond markets. Having now become familiar with these markets, foreign investors are likely to see them as a core part of their portfolios," said Azis.
The Annual Bond Market Liquidity Survey, conducted by AsianBondsOnline and released along with the quarterly Asia Bond Monitor, showed liquidity in emerging East Asia’s bond markets continues to increase due to rising foreign investor interest in the markets and increasing investor diversity.
