The Asian Bond Market: 12 Things to Know

Article | 6 September 2012

Governments, corporate entities and investors issue and trade bonds to fuel growth and provide financial stability to the Asia and the Pacific region. Here are 12 things you should know about the Asian local currency bond market.

  1. The local currency (LCY) bond market of emerging East Asia (EEA) has risen from approximately $1 trillion in 2001 to $5.7 trillion as of end 2011. Source: Asia Bond Monitor, April 2012
  2. Total LCY bonds outstanding in EEA at the end of September 2011 were approximately 8.1% of the global bond market against 2.1% in 1996. Source: Asia Bond Monitor, April 2012
  3. The domestic corporate bond market has been the growth driver for the EEA LCY bond market as a whole over the past few years and accounts for about a third of total bonds outstanding in the region. Source: AsianBondsOnline
  4. The largest LCY bond market in EEA is the People's Republic of China with $3.4 trillion in bonds outstanding at end 2011. Source: AsianBondsOnline
  5. Foreign holdings of local currency debt in EEA have significantly increased in recent years. Source: AsianBondsOnline
  6. Institutional investors are rapidly increasing their share of total government and corporate bond holdings in EEA. Source: Asia Bond Monitor, April 2012
  7. The Republic of Korea, Malaysia, and Thailand had the most liquid government bond markets - as measured by quarterly turnover ratios - at the end of 2011. Source: AsianBondsOnline
  8. The most important structural issue holding back liquidity in EEA is the need to increase investor diversity, according to the 2011 Asian Bond Market Liquidity Survey. Source: AsianBondsOnline
  9. To mitigate against the risks associated with the sudden reversal of capital inflows, and to minimize the currency and maturity mismatches, ASEAN+3 governments launched the ASEAN+3 Asian Bond Market Initiative in 2002 to foster the development of local currency bond markets. Source: Strengthening the Financial System and Mobilizing Savings to Support More Balanced Growth in ASEAN+3
  10. ASEAN+3, with an ADB contribution, has established the Credit Guarantee and Investment Facility to provide credit enhancement for investment grade companies seeking to issue local currency bonds. Source: Strengthening the Financial System and Mobilizing Savings to Support More Balanced Growth in ASEAN+3
  11. AsianBondsOnline is a one stop clearinghouse for information on sovereign and corporate bonds. It provides centralized access to information about the region's developing bond markets including data on current market activities and performance, the legal and regulatory framework of each market, and government policies and initiatives. Source: AsianBondsOnline
  12. Commentaries on the most important bond market news and developments for the week are published in the Weekly Debt Highlights. Source: Weekly Debt Highlights