Asian bond market hits record $45 billion

MANILA, Philippines - Asian borrowers have raised a record $45 billion in the bond market so far this year, eclipsing the previous high of $43 billion in 2005, a leading finance publication said.

In a report, FinanceAsia Magazine said cash-rich investors are seeing signs of economic recovery in the region.

“As yields have fallen, state-owned entities, banks and corporations are more prepared to lock in long-term funding, indicating that 2009 could be another record year for bond issuance in the region,” the publication reported.

Korean entities have issued around 50 percent of Asia’s dollar bonds this year, up from 20 percent in the same period in 2008, which was a five-year low. They have raised more than $18 billion so far this year – more than the previous full-year high of $14.9 billion in 2007.

FinanceAsia said borrowers from other countries within the region followed suit, buoyed by impressive Asian demand for paper issued by well-known European and US names.

“Regulars, such as the Philippines and Indonesia launched benchmark deals, and Hong Kong leaders such as Hutchison Whampoa, Henderson Land and Kowloon-Canton Railway raised cash with US dollar issues,” it added.

Prior to the $1-billion bond issuance by the Philippines (its third for the year), three other benchmark-sized deals – a sovereign from Sri Lanka, the largest Asian high-yield in more than a year from Indonesia’s Adaro Energy, and another Korean offering from Korea Expressway – were also completed.

The Philippine bond issue alone attracted over $5 billion in demand and more than 200 accounts.

Finance Asia said one reason for the strong interest was the 25-year maturity.

“In Asia there hasn’t been any dollar bonds with that kind of maturity for 18 months, which means investors with long-dated liabilities who tend to play this part of the curve were keen to make the most of the opportunity. The long end of the Asian curve in general has rallied lately and the volatility has come down; more specifically, there has been enough buying at the long end of the Philippines curve to suggest that there would be demand for another issue at that end. Indeed, the Philippines curve has been inverted at the long-end, making this a good opportunity for government to get long-dated funds at a reasonable cost,” the report said.

The Philippines earlier sold $1.5 billion of 8.5-percent bonds maturing in 2019 in January and another $750 million in July worth of 6.625-percent bonds maturing in 2020.       – Ted Torres