Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

As Asia's borrowers turn homeward, local bond issuance surges

Economy Oct 05, 2022 05:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Workers leave Bank Indonesia headquarters in Jakarta, Indonesia, September 2, 2020. REUTERS/Ajeng Dinar Ulfiana

By Rae Wee

SINGAPORE (Reuters) - Asian issuance of bonds denominated in local currencies have ballooned to their largest in more than a decade as borrowers turn shy of expensive U.S. dollar debt and tap cheaper, liquid markets at home.

A total of $2.65 trillion has been raised in Asia excluding Japan and Australia via 12,075 local currency bond issues by September, data from Refinitiv showed.

That reflects a roughly 10% increase in proceeds from a year earlier and the highest for the year-to-date period in over a decade.

Of this, 47.2% came from government issuers, at $1.25 trillion across 2,057 issues. This was followed by the financials sector, constituting 31.2%, or $825.78 billion, from 5,419 issuances.

“Local currency markets are more peculiarly insulated from what’s happening on the global front," said Wong Kwok Kuan, managing director and regional head of debt markets at Maybank Investment Banking Group.

The Federal Reserve has hiked interest rates by 300 basis points (bps) since the start of the year, taking the Fed funds target rate above 3%. The latest projections show that rate rising to 4.25%-4.5% by the end of 2022.

That frenetic pace of rate rises makes local currency bonds relatively cheaper to issue than dollar bonds, particularly as the dollar scales multi-year highs and weakens local currencies.

Meanwhile, rate hikes in Asia have generally been more subdued.

Bank Indonesia, for instance, only began hiking in August and has raised rates by a total of 75 bps. The Philippine central bank has increased rates by 225 bps since May and the Bank of Thailand has hiked by 25 bps twice, in August and September.

Andrew Lim, regional head of debt capital markets at Maybank Investment Banking Group, pointed to how the U.S. dollar capital market had also "seen periods where it was shut given the macro volatility", causing corporates to look onshore.

Graphic: Asia bond issuance


Indonesian company Mandiri Tunas Finance, which is majority-owned by Bank Mandiri, raised 376.615 billion rupiah ($24.80 million) of 5-year bonds at 6.75% in February. In August 2020, it paid 8.6% on 5-year bonds.

Yields on the 5-year U.S. Treasuries have risen from about 0.4% in December 2020 to about 3.8% currently. Credit bonds are typically priced on spreads over sovereign bonds.

The yield on Asian investment grade corporate dollar bonds is now at 5.8%, up 300 bps this year.

The spurt in local bond issuance has also been spurred by a growing appetite for such bonds, as domestic investors – typically the main buyers – hunt for opportunities to stay invested at home.

“The local currency markets are well supported by domestic institutional investors such as life insurance companies and asset managers, as they have local currency assets and specific mandates to deploy into these markets,” said Edmund Leong, UOB’s head of group investment banking.

Thailand-headquartered Gulf Energy Development Public Company Limited successfully issued debentures totalling 35 billion baht ($940 million) in August, of which 11 billion baht was distributed to high net worth investors, banks, insurance and securities firms.

To be sure, investors say that the volume and amounts raised from issuances this year are not surprising, and reflect steady growth in markets over the past years.

From 2020 to 2021, the total amount raised from local currency bonds issued in Asia, excluding Japan and Australia, increased by nearly 15%, and from 2019 to 2020, proceeds were nearly 30% higher.

Even as rates rise, issuers are expected to continue tapping domestic markets for refinancing of existing debt and other capital requirements.

“I’d say financing costs remain within expectations, palatable," said Leonard Kwan, portfolio manager of T. Rowe Price’s dynamic emerging markets bond strategy.

"For the most part, it would still be cheaper to finance domestically, even at current higher rates, than external markets.”

($1 = 15,185.0000 rupiah)

($1 = 37.2300 baht)

As Asia's borrowers turn homeward, local bond issuance surges

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email