Strong resurgence in Asian high-yield bonds
Asian high-yield issuers (rated below ‘BBB’ or ‘Baa) count over US$6.2 billion in offshore debt year-to-date – four times last year’s total amount
Bond issuance volumes have picked up in the early months of this year, as borrowers have capitalised on low volatility and interest rates.
Issuances have reached some US$950 billion year-to-date, which is up 5 per cent over the same period last year, and those from Asian high-yield issuers (with credit ratings below “BBB” or “Baa”), are of particular interest, which count over US$6.2 billion in offshore debt year-to-date.
This is over four times the total amount issued in 2016 whereas the broader high-yield segment saw a 66 per cent increase year on year.
As the largest bond market in the Asia ex-Japan region, China’s bond market has traditionally been dominated by high-yield supply from Chinese corporates.
Last year, issuers from mainland China accounted for 78 per cent of total volume and the trend has continued into 2017. Nevertheless, we are also seeing the breadth of issuers continuing to broaden, with more south and southeast Asian players having issued or joining the pipeline in recent weeks.
As a case in point, in January, the market received a boost from India’s Jain Irrigation when it raised funds from the offshore debt market for the first time.
Deal sizes have also increased, with the average transaction size at US$300 million compared with US$260 million in 2016.
