Article

Asian international bond issuance increases 25% YoY fueled by Real Estate agents

Post Date: 10/04/2018

By Ioannis Gougoulias

The data below were retrieved using CMDportal's Data Sheet and Instrument Search tool.



International Asian bond issuance volume increases 25% YoY


The overall bond issuance by Asian borrowers in the Asian Debt Capital Markets has reached USD389bn for the first quarter of 2018. This figure suggests a small USD24bn or 6.7% increase compared to the same period in 2017. Although, the figures suggest that the issuance is up, the growth rate of the first three months of 2018 is lower than the growth rate of the market in 2017, when it grew by 22.5%, reaching eventually in the end of 2017, USD2.3tn. The above figures include domestic and international issuance as long as vanilla and structured notes.

The international market, which for 2017 consisted almost 12.4% of the total market, has grown a lot so far in 2018. Asian borrowers have issued more than USD86bn YTD, a figure denoting an USD18.7bn or 27.5% increase YoY. As a result, the international issuance now is 22.2% of the total. The Corporate sector recorded the large jump, issuing USD30.8bn in just 3 months. This amount suggests a 44% increase YoY. This upward trend was caused partially caused by Chinese property developers. The industry sees a large amount of maturing later in 2018 and as a result companies try to refinance it now with better terms under the low interest-rate environment. China Evergrande Group and Greenland Global Investment are two examples of the most prolific Chinese real estate issues in 2018 YTD.

Within Asian Debt markets, almost 70% of international Bonds, Notes and MTNs are denominated in the USD currency. Only 7.84% and 6.76% are in HKD and EUR. The total amount of international bonds issued in the HKD currency has risen 287% YoY, reaching now USD6.7bn from USD1.7bn. The root of this increase can again be rooted in the increased issuance activity of real estate developers. China Evergrande’s HKD18bn 5-year and Future Land Development Holdings HKD2.3bn 2.25 year Bonds are some of the examples. Although EUR deals consist the third largest chunk of the issuance, the total figure is down 23% YoY. On the other hand, CNY issuance recorded a sharp boost reaching USD3.3bn, suggesting a 371% increase YoY. The boost was driven by FIGs and by Real Estate companies.


 

The following excerpt is included in CMDportal's 2018 Winners in Debt Capital Markets hard copy publication. To access the full PDF version follow this link: 2018 CMD Awards

Asian bond Issuance volume continues to grow in 2017. Overall issuance by borrowers from Asia in Bond, MTN and Notes format increased by 70% or US853bn to USD2tn. This was more than in the increase in the previous 12 months when issuance volume was 52% higher. These numbers include issuance in domestic debt capital markets and structured notes. 

 

In the international markets, which make up 14% of total, the growth rate for issuance by Asian borrowers is 57% or USD102bn to USD280bn. Within this universe corporates grew faster than FIGs and within corporates the real estate segment is the largest and grows fastest. Other fast growing sectors included Chemicals, Electricity Companies and Food and Drink producers. 

 

Chinese property developers increased their usage of the offshore market, with a total of USD22.6.bn to USD33.5bn. Kaisa Group and China Evergrande Group both raised around USD6.3bn each through multi-tranche transactions and thus accounted for over half of this amount. Compared to 2016, there was less supply from Telecommunication and construction firms.

Asia excluding Japan grew 44% or USD494bn to USD1.6tn. In international bonds this was 60% or USD85bn to USD228bn. Within this universe it is equally the corporate sector which is the largest contributor and also responsible for the largest growth rate. 

 

International investors most keen on USD Asian bonds. 75% of international Bond, Note and MTN issuance by Asian borrowers was in USD. Only 10% was in EUR and 5% in JPY. Compared to 2016, EUR issuance by these borrowers is in decline whilst USD denominated issuance is up. Year on year EUR issuance increased 23% whilst USD issuance went up by 66%. JPY issuance also increased and so did GBP, SGD, AUD and HKD. CNY issuance, however, was a lot less in 2017 than in 2016. Issuers that got some large deals done included Softbank Group USD2.75bn 6% perpetual subordinated NC6 resettable Notes and, as mentioned, China Evergrande Group with a 3 trance placement including a 6.25% USD500m 4-year, a 7.5% USD1bn 6-year and a 8.75% USD2.3bn 8-year. In total Asian borrowers were active in 21 different Eurobond currencies, substantially more than in 2016, when only 17 were recorded.



Where is this data coming from?

CMDportal is the global bond and money market utility connecting issuers, dealers and investors. The service aggregates data from a wide range of sources, including issuers, dealers and fund investors recording both who issued, who traded and who bought the instruments.


Can i produce a Debt Capital Markets statistical query like this?


Yes you can. CMDportal provides a wide range of tools to analyse bond and money markets. Data Sheet results can be downloaded as an XLS file.

Mr. Gougoulias is an Analyst at CMDportal. He can be reached at analysts@cmdportal.com.