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With the credit squeeze in the United States imposing limits on many borrowers’ access to the market, some foreign companies are beginning to issue bonds within the Asian region. The weak US dollar allows these local currency denominated bonds to achieve attractive yields when swapped back into US dollars, while still appealing to Asia’s domestic investors. The increased currency volatility in the region has also created attractive currency swap rates between some Asian currencies from time to time.
In February 2008, Lehman Brothers issued an SGD250 million 5-year bond. It is the largest foreign issue in the Singapore bond market to date. By comparison, in March the Export-Import Bank of Korea raised a similar amount by selling MYR1 billion of bonds in Malaysia, and the Industrial Bank of Korea tapped the Malaysian debt market again at the start of April for MYR1 billion, after raising JPY60 billion in Japan five months before that. All these Korean issuers have been able to price their bonds at a yield that was 30-50 over the local currency swap rate. At the same time Malaysia, with the world’s largest Islamic bond market, is being encouraged to issue more non-MYR Islamic bonds abroad in order to capture a broader market base. And the government of Thailand has contemplated issuing a JPY 55 billion three- to seven- year bond in April or in May 2008.
Some analysts have cautioned that regular issuers from the US and Europe might face the same credit pricing constraints in Asia as in their home market. Although high-quality issuers may attract local bidders, the absolute size of local currency bond issues in Asia’s regional domestic markets is still smaller than for those for USD issues.
Links:
Asian Credit Investor - Asian Issuers Continue to Tap Local Markets
Asian Credit Investor - Bank Issuers Eyeing More Local Currency Deals
The Star Online - KEXIM sells RM 1bil Malaysian bonds
Business Times - Malaysia should issue more non-ringgit Islamic bonds
Thailand contemplates yen transaction in April (Registration required)
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| For indepth Market Analysis on structural reforms and economic and social developments in Asia. |
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| The views expressed in the linked documents/web sites are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB) or its Board of Directors or the governments they represent. ADB makes no representation concerning and does not guarantee the source originality, accuracy, completeness, or reliability of any statement, information, data, finding, advice, opinion or views, presented in the linked documents/web sites. |
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BIS Quarterly Review, September 2008
Regional, Bank for International Settlements | | | | | 01 Sep 2008 |
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Recent comments by Japan officials on economy, BOJ
Japan, Reuters | | | | | 28 Aug 2008 |
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Coming Interbank Liquidity Squeeze
Indonesia, Morgan Stanley | | | | | 26 Aug 2008 |
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Trade and Investment News , 25 August 2008
Indonesia, Bank Indonesia | | | | | 26 Aug 2008 |
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Financial Market Performance in July 2008
China, People's Rep. of, People's Bank of China | | | | | 25 Aug 2008 |
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IMF Finance and Development
Regional, International Monetary Fund | | | | | 25 Aug 2008 |
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Singapore: Inflation has Peaked in 1H08 and is on the Wane
Singapore, United Overseas Bank | | | | | 25 Aug 2008 |
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Still Too Early for Meaningful Rate Cuts
Viet Nam, Morgan Stanley Global Economic Forum | | | | | 22 Aug 2008 |
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Singapore: July NODX Fell For a Third Straight Month
Singapore, United Overseas Bank | | | | | 18 Aug 2008 |
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Hong Kong: growth forecasts lowered
Hong Kong, China, DBS Group Research | | | | | 18 Aug 2008 |
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Singapore: Re-aligning Our SGD NEER Model
Singapore, United Overseas Bank | | | | | 13 Aug 2008 |
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Singapore: Choppy Waters Ahead
Singapore, United Overseas Bank | | | | | 11 Aug 2008 |
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Export Machine: A Health Check
Singapore, Morgan Stanley | | | | | 08 Aug 2008 |
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Global Financial Stability Report: GFSR Market Update
Regional, International Monetary Fund | | | | | 28 Jul 2008 |
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Half-Yearly Review of the Hong Kong Securities Market
Hong Kong, China, Securities and Futures Commission | | | | | 15 Jul 2008 |
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Asian Economic and Bond Outlook – Q3 2008
Regional, State Street Global Advisors | | | | | 07 Jul 2008 | |
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