Emerging E Asia Bonds Hit $5.2 Tn in 2010

Emerging East Asia's bond markets expanded by 13.6 percent to $5.2 trillion in 2010 on the back of strong growth in corporate bonds, the Asian Development Bank said Tuesday.
The region's local currency bond markets, excluding China, grew by 11.6 percent year-on-year. In China, the region's largest market, total bonds outstanding climbed 15.1 percent year-on-year to reach $3.1 trillion, said the latest edition of the quarterly Asia Bond Monitor.
The development lender said the broad-based growth helped offset a decline in issuance by central banks and some governments in the last quarter of 2010.

"The broadening of overall bond market growth within emerging East Asia and the expansion of the corporate market demonstrate the opportunities that are increasingly available to investors in local bond markets," said Iwan Azis, head of the bank's Office of Regional Economic Integration.

Emerging East Asia includes China and Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Growth in the region has been marked by an increase in issuance of longer-dated bonds in many individual corporate and government bond markets, the bank said. Lengthened duration to maturity will in turn attract a greater diversity of investors.

Local currency issuance totaled $3.8 trillion in emerging East Asia in 2010, a 10.2 percent increase over 2009. Government bond issuance expanded 12.3 percent to reach $3.1 trillion, while corporate issuance grew 1.1 percent to $634 billion.

Foreign participation meanwhile continued to expand as investors hunted for yield and anticipated gains from appreciation of the underlying currencies. For example, foreigners held 30.5 percent of Indonesian government debt at the end of 2010.

The bank said that major risks to the market outlook were inflationary pressures due to rising commodity and oil prices, and the possibility of further interest rate hikes. The behavior of global markets could also add to these risks and the volatility of the outlook, it said.
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