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.

Summary

Market Overview and Highlights of Asia (ex-Japan, Australia and New Zealand) debt issuance in First Quarter 2018

Total issuance in 1Q’18 came in at USD 75.5 billion (bn) as of March 31, down 10.9% quarter-over-quarter (qoq) from 4Q’17 (USD 84.8bn) and down 9.2% year-over-year (yoy), inclusive of high grade (HG), high yield (HY), and unrated deals. Slowing Chinese credit growth, coupled with higher US interest rates and widening credit spreads across the globe at a time of increased market volatility, all contributed to the slowdown in issuance – even so, in absolute terms, issuance remains robust as issuers have generally rushed to complete deals ahead of even higher US interest rates, which are expected as the year progresses.

Domestic CNY Issuance

Total domestic CNY issuance stood at USD 119.8bn in the first quarter of 2018, down 12.6% from the fourth quarter (USD 137.2bn) but up 16.5% yoy (USD 102.9bn). By tenor, 77.2% of first quarter issuance (USD 92.5bn) would mature in five years or less, followed by the 7-10 year bucket (USD 14.3bn, or 12.0% of issuance). By sector, finance led issuance totals (USD 32.3bn), followed by construction (USD 23.6bn) and transportation (USD 17.6bn). Outstanding domestic CNY debt stood at USD 11.2tn at the end of first quarter 2018, with sovereigns leading totals (USD 6.3tn), followed by financials (USD 2.9tn) and industrials (USD 878.0bn).

Offshore Renminbi (CNH) Issuance

The pace of offshore issuance picked up in the first quarter from the fourth quarter; an equivalent of USD 3.8bn in CNH bonds were issued, an increase of 43.7% qoq and an increase of 85.6% yoy. In terms of tenor, virtually all (95.0%) all of first quarter issuance was accounted for by transactions with tenors of 5-years or less. HG deals rated A+ totaling USD 785.1mn had the highest share among rated deals (20.5%). In terms of sector, finance was the largest issuer in 1Q’18 (USD 1.6bn), followed by real estate (USD 1.4bn) and transportation (USD 251.7mn).

Credits

ASIFMA

• Executive Director, Fixed Income: Vijay Chander
• Associate: Timothee Bihet

SIFMA Research

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