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

Total issuance in 4Q’14 came in at USD 47.91 billion (bn) as of December 31 bringing 2014 issuance to USD 195.96bn, a new high in G3 issuance. Fourth quarter issuance is above quarter-over-quarter (qoq) from 3Q’14 (USD 40.61bn) and up 64.8% year-over-year (yoy), inclusive of high grade (HG), high yield (HY), and unrated deals.

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

For the first quarter 2015, total G3 issuance stood at USD 48.99bn, with HG transactions accounting for USD 39.98bn, HY issues accounting for a total of USD 6.12bn, and unrated issues accounting for 2.87bn. China remains the largest issuing country in the first quarter, accounting for a total of USD 22.48bn, or nearly 46%, of G3 issuance in 1Q’15, with USD 16.98bn and USD 4.48bn in HG and HY deals, respectively, priced from China alone. South Korea replaced Hong Kong to be second in issuance with USD 5.17bn, followed by Malaysia with USD 5.00bn in issuance.

Overall G3 debt outstanding in the region stood at USD 705.65bn, a growth of 4.7% qoq.

Total Issuance and Outstanding for Asia inclusive of Japan, Australia, and New Zealand

Total G3 issuance in Asia (including Japan, Australia and New Zealand) stood at USD 130.27bn in the first quarter of 2015, a growth of 20.3% qoq and 11.0% yoy. Total HG G3 issuance in Asia (including Japan, Australia and New Zealand) was USD 94.00bn in the first quarter of 2015, a growth of 29.5% qoq and 1.8% yoy. HY issuance was USD 7.62bn in the first quarter of 2015, a growth of 13.5% qoq but a decline of 13.8%, yoy. Unrated G3 issuance in Asia was USD 28.65bn in the first quarter of 2015, a decline of 1.2% qoq but an increase of 77.3% yoy. Outstanding G3 debt, including developed market Asia, stood at USD 11.98tn at the end of first quarter 2015, a growth of 0.3% qoq, with declines in unrated debt (USD 3.13tn, 4.2% decline) and HY debt (USD 153.33bn, a 20.5% decline) but growth in HG debt (USD 8.70tn, 2.5% growth).

Domestic CNY Issuance

Total domestic CNY issuance stood at USD 65.34bn in the first quarter of 2015, a decline of 40.7% qoq (USD 110.27bn) and 39.7% yoy (USD 108.29bn). By tenor, 70.0% of first quarter issuance (USD 45.70bn) would mature in five years or less, followed by the 5 – 8 year bucket (USD 11.08bn). By sector, construction led issuance totals (USD 11.84bn), followed by finance (USD 8.80bn).

Outstanding domestic CNY debt stood at USD 5.55tn at the end of first quarter 2015, with sovereigns leading totals (USD 3.17tn), followed by financials (USD 1.02tn) and industrials (USD 516.97bn).

Offshore Renminbi (CNH) Issuance

The pace of issuance slowed on a yoy basis in the first quarter. For the first quarter of 2015, an equivalent of USD 7.09bn in CNH bonds were issued, a decline of 29.5% qoq and 67.1% yoy. Continued two-way movements in the Chinese currency, the increasing signs of stress in the Chinese HY sector, particularly among Chinese property names, the diversion of some offshore issuance to Taiwan (the Formosa bond market) on account of cheaper funding costs and the continuing liquidity drain caused by the diversion of some of the offshore CNH liquidity to the “Stock Connect” program, all played a part.

The total of dim sum bonds outstanding stands at USD 92.78bn, a decline of 11.1% qoq.

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