ASIFMA Asia Credit Report, Second Quarter 2014

Market Overview and Highlights of Asia (ex-Japan, Australia and New Zealand) debt issuance in Second Quarter 2014

Total issuance in 2Q’14 came in at a very strong USD 65.30 billion (bn) as of June 30 bringing YTD issuance of 1H’14 to USD 104.82bn; issuance is ahead quarter-over-quarter (qoq) from 1Q’14 (USD 39.52bn) but up 52.7% year-over-year (yoy), inclusive of high grade (HG), high yield (HY), and unrated deals. With issuance for the rest of the year likely to be strong, given the large volume of refinancings in the pipeline, coupled with opportunistic issuance to take advantage of interest rates that have continued to trend lower than anticipated at the beginning of 2014, FY’14 issuance could well turn out to be an all-time record.

Key trends in Asia (ex-Japan, Australia and New Zealand) G3 & LCY bond issuance

For the second quarter 2014, total G3 issuance stood at USD 65.30bn, with HG transactions accounting for USD 50.83bn, HY issues accounting for a total of USD 8.38bn, and unrated issues accounting for 6.09bn. China has been by far the largest issuing country in the first quarter, accounting for a total of USD 34.22bn of the USD 65.30bn in G3 issuance seen so far in 2Q’14, with USD 27.53bn and USD 3.63bn in HG and HY deals, respectively, priced from China alone. South Korea continues to remain second with USD 8.38bn in issuance, followed by India with USD 5.58bn in issuance.

Overall G3 debt outstanding in the region stood at USD 611.64bn, a growth of 8.9% qoq. High grade debt accounted for the bulk of total outstanding debt at USD 391.97bn (a 10.2% growth qoq), followed by HY debt at USD 143.82bn (a growth of 3.6% qoq) and NR debt at USD 75.86bn (a growth of 13.1% qoq). China (with USD 154.8bn), South Korea (with USD 122.5bn) and Hong Kong (with USD 85.8bn) were the three countries with the largest shares of G3 debt outstanding. In terms of ratings, within the HG space, deals rated A+ (USD 118.3bn) accounted for the largest share of debt outstanding, while NR deals (USD 75.9bn) and BB+ transactions (USD 61.8bn) dominated the deals outstanding in the HY space. By sector, sovereigns with a total of USD 149.9bn accounted for more than a third of outstanding G3 paper, with financials (USD 145.2bn) second. Finally, deals with remaining tenors of 5 years or less (USD 287.7bn) accounted for the bulk of total Asia (ex-Japan, Australia and NZ) debt outstanding.

Total Issuance & Outstanding – G3 and LCY for Asia (including Japan, Australia and New Zealand)

Total HG G3 issuance in Asia (including Japan, Australia and New Zealand) stood at USD 145.53bn in the second quarter of 2014, a growth of 24.4% qoq (USD 116.96bn) and 16.1 yoy (USD 125.35bn). Total HG G3 issuance in Asia (including Japan, Australia and New Zealand) was USD 103.23bn in the second quarter of 2014, a growth of 11.6% qoq and 7.0% yoy. HY issuance was USD 11.86bn in the second quarter of 2014, a growth of 34.3% qoq and 82.9% yoy. Unrated G3 issuance in Asia was USD 30.42bn in the second quarter of 2014, an increase of 94.4% qoq and 35.9% yoy. Outstanding G3 debt, including developed market Asia, stood at USD 11.94tn at the end of second quarter 2014, a growth of 1.6% qoq, with growth in HG debt (USD 8.63tn, 1.5% growth), HY debt (USD 190.07bn, 1.2% growth) and unrated debt (USD 3.12tn, 1.7% growth).

Finally, turning to LCY debt issuance, total HG issuance stood at USD 347.44bn in the second quarter of 2014, while HY issuance and unrated issuance was USD 4.59bn and 211.14bn, respectively, over the same period.

Total Issuance & Outstanding – Domestic CNY issuance

Total domestic CNY issuance stood at USD 157.63bn in the second quarter of 2014, an increase of 37.5 percent qoq (USD 107.71bn) but a 37.5% decline yoy (USD 252.37bn). By tenor, 54.3% of second quarter issuance (USD 85.53bn) would mature in five years or less, followed by the 5 – 7 year bucket (USD 41.42bn). By sector, construction led issuance totals (USD 42.74bn), followed by transportation (USD 26.06bn).

Outstanding domestic CNY debt stood at USD 4.9tn at the end of second quarter 2014, with sovereigns leading totals (USD 2.40tn), followed by financials (USD 1.25tn).

About the Report

Done in partnership with ASIFMA, the Asia Credit Report is a quarterly report on the trends and statistics of the Asian bond market, including both the investment grade and high yield bond market. Additional statistics on the G3 and CNH markets are also included.

For more information on ASIFMA’s efforts in Asian fixed income, please visit ASIFMA.

Credits

ASIFMA

  • Executive Director, Fixed Income: Vijay Chander

SIFMA Research

  • Managing Director, Head of Research: Kyle Brandon
  • AVP: Sharon Sung