Asia's debt market will be stimulated by the entrance of new local investors and an awareness of Asian debt elsewhere in the world, according to Mark Bucknall, head of new issues at HSBC Markets. 'Currently, the institutional investor base in Asia is underdeveloped compared with Europe but we will soon have the Mandatory Provident Fund which will be a big investor,' he said. 'It will be in Hong Kong, so it will be very receptive to Hong Kong, China and Asian credit risk. 'HSBC Asset Management recently launched the Asian High Yield Bond Fund. 'That will be buying Asian credit whether in Asian currency or US dollars,' Mr Bucknall said. 'These are examples of growing institutional appetites in Asia but the same is true of institutions in the US and Europe.' Spreads on European credits had narrowed much that 'there is no return any more', Mr Bucknall said. 'The pricing has been squeezed out of the market. So, if you are a fund manager sitting in Europe, you are very happy with European credits but you are actually employed to show a return on your fund. 'If you can get LIBOR flat for a basket of European credits and LIBOR plus 50 for a basket of Asian credits, you have to look seriously at Asia to give you the yield and return you need to deliver to investors.' This pressure for returns will force foreign investors to familiarise themselves with Asian credits to the benefit of the local capital markets. Supply of Asian credits, once an argument against investing in Asian debt instruments, was no longer an issue, Mr Bucknall said. 'As you get more supply and the market becomes more professional and rational, more investors get more comfortable.'