Asia ex-Japan (AxJ) G3 bond issuance hit a three-year high in 2019 amid low interest rates and positive news about a possible resolution to US-China trade tensions, an international bank official said.
AxJ — Asian countries except Japan — last year saw US$338 billion of G3 currency bond issuance, with the issuance volume from the Chinese mainland and Hong Kong comprising 70 percent of the total, said David Yim, managing director head at debt capital markets, Greater China & North Asia Capital Markets of Standard Chartered. The G3 currencies are the US dollar, the euro, and the Japanese yen.
Usually, Hong Kong companies compare the cost of issuing bonds with applying for loans and choose the less-expensive option
ALSO READ: Overseas institutions maintain vibrant presence in bond market
Worth noting is that Hong Kong had US$17 billion in G3 bond issuance last year, nearly five times more than in 2018, Yim said.
Usually, Hong Kong companies compare the cost of issuing bonds with applying for loans and choose the less-expensive option. Yim said some Hong Kong companies that have not issued bonds in the past three to five years chose to issue bonds last year.
In the second half of 2019, the US cut interest rates three times, which lowered the bond issuance costs for issuers. That development and the resumption of Sino-US trade talks during the 2019 G20 Osaka summit lifted market sentiment, Yim said. The positive news boosted bond issuance in the second half of 2019.
READ MORE: Overseas institutions racing into Chinese bond market
In the first half of 2019, mainland issuers, particularly property developers, comprised about 50 percent of Chinese overseas issuance, and the percentage fell in the second half.
The year 2019 was a bumper year for most investors, and the strong momentum may continue this year, Yim said. But he said Asian G3 bond issuance is unlikely to exceed that of 2019 amid global economic uncertainties and lower demand of issuers. However, he said, the market is flush with funds with high liquidity, and it’s a good time for issuers to raise funds.
