EAsia urged to issue more bonds

MANILA, Philippines - The Asian Development Bank (ADB) has urged East Asian nations to take advantage of delays in the US tapering program to issue more bonds.

According to the ADB’s Asian Bond Monitor, East Asia is vulnerable to a shift in investor sentiment when the US eventually scales back its asset purchase program and as it tackles still-unresolved questions over its government debt ceiling.

Emerging East Asia comprises China, Hong Kong, Indonesia, the Republic of Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

The delay might allow governments and their respective corporate sector to raise more capital at still reasonable interest rates.

“Volatile capital flows make it tougher for policy-makers to manage the economies while looming tighter liquidity could push down asset prices, particularly in the property sector, undermining the health of financial firms with large holdings,” the report said.

East Asia’s local currency bond markets expanded 2.4 percent quarter-on-quarter with $7.1 trillion in bonds outstanding at the end of September.

The bond market growth was led by the 3.9-percent expansion of bond issues, with the Philippines growing 3.6 percent.

The region’s government bond markets grew 2.1 percent on quarter to $4.4 trillion, up from the quarterly growth of 1.1 percent in the April through June quarter. The corporate market increased 2.9 percent to $2.7 trillion, slower than the eight-percent expansion in the previous three months.

Local currency bond market, meanwhile, was uneven, led by Vietnam’s 18.8 percent, Indonesia’s 16.3 percent, the People’s Republic of China’s 14.4 percent and the Philippines’ 12.5 percent.

 â€œThe Philippines’ corporate sector grew more rapidly on a year-on-year rather than on a quarter-to-quarter basis in the third quarter of 2013, but its government sector’s year-on-year growth, while high are 13.6 percent, was still less than that of Vietnam and Indonesia,” the ADB monitor said.

Total Philippine government bonds outstanding reached P3.7 trillion (roughly $86 billion) at end-August.