Market Overview and Highlights of Asia (ex-Japan, Australia and New Zealand) debt issuance in Fourth Quarter 2015

Total issuance in 4Q’15 came in at USD 29.9 billion (bn) as of December 31, up 13.1% quarter-over-quarter (qoq) from 3Q’15 (USD 26.4bn) but down 37.5% year-over-year (yoy), inclusive of high grade (HG), high yield (HY), and unrated deals. For the full year, issuance was USD 169.2 billion, comprised of USD 134.3bn HG issuance, USD 16.0bn HY issuance, and USD 19.7bn unrated issuance, well below the high of USD 201.3 billion reached in 2014.

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

For the fourth quarter 2015, total G3 issuance stood at USD 29.9bn, up 13.1% qoq but down 37.5% yoy. China remains the largest issuing country in the fouth quarter, accounting for a total of USD 15.4bn, or just over half (51.4%) of G3 issuance in 4Q’15; USD 10.6bn and USD 850mn in HG and HY deals, respectively, were priced from China alone. South Korea continues trail behind as the second largest issuing nation, with USD 4.9bn issued in 4Q’15, followed by Indonesia with USD 3.6bn in issuance.

Overall G3 debt outstanding in the region stood at USD 779.76bn, a growth of 2.2% 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 94.6bn in the fourth quarter of 2015, a growth of 2.6% qoq but a decline of 12.7% yoy. In 4Q’15, total HG G3 issuance in Asia was USD 58.2bn, a growth of 5.3% qoq but a decline of 19.8% yoy; HY issuance was USD 3.8bn, a decline of 36.4% qoq and 44.0% yoy; and unrated issuance was USD 32.6bn, a decline of 6.0% qoq but an increase of 12.5% yoy. For the full year, total G3 issuance reached USD 440.8bn, falling just short of 2014 volumes of USD 487.3 billion, comprised of USD 291.2bn HG issuance, USD 22.2bn HY issuance, and USD 133.9bn unrated issuance. Outstanding G3 debt, including developed market Asia, stood at USD 11.86tn at the end of fourth quarter 2015, a decline of 0.5% qoq, with declines in unrated debt (USD 2.2tn, a 3.2% decline), but growth in HG debt (USD 9.4tn, a 0.2% growth) and HY debt (USD 214.5bn, a 1.5% growth).

Domestic CNY Issuance

Total domestic CNY issuance stood at USD 187.6bn in the fourth quarter of 2015, up 19.9% from third quarter volume (USD 156.5bn) and 70.1% yoy (USD 110.3bn). Fourth quarter volumes more than made up for the relatively low levels of issuance in the first three quarters; for the full year, domestic CNY issuance reached USD 558.4bn, well above 2014 volumes (USD 498.7bn) but half that of prior years.

Outstanding domestic CNY debt stood at USD 7.2tn at the end of fourth quarter 2015, with sovereigns leading totals (USD 4.05tn), followed by financials (USD 1.58tn) and industrials (USD 593.22bn).

Offshore Renminbi (CNH) Issuance

The pace of issuance picked up slightly on both a qoq and a yoy basis in the fourth quarter. For the fourth quarter of 2015, an equivalent of USD 8.6bn in CNH bonds were issued, an increase of 119.2% qoq but a decline of 14.7% yoy. For the full year, CNH issuance was USD 29.4bn, a decline of 30.3% from 2014 totals. (USD 42.1bn).

The total of dim sum bonds outstanding stands at USD 108.8bn, an increase of 11.7% qoq. Continued erosion of the CNH deposit base in Hong Kong following steep falls in the offshore Chinese currency, which at one point in time traded considerably weaker than its onshore counterpart, contributed to negative investor perceptions towards the CNH and the dim sum bond market overall.

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