Asian bond issuance dries-up in holiday lull

Asian bond issuance dries-up in holiday lull

SINGAPORE (Dow Jones): New offerings of Asian international
debt remained at a standstill this week with many issuers
preferring to wait until after the usual holiday season lull to
enter the market.

Among the issuers that could tap the U.S. dollar bond market
later in January are Indonesia, the Philippines and China,
analysts say.

Meanwhile, Asia could see an increase in issuance of local
currency bonds in the new year as Asian issuers look to decrease
their reliance on dollar-denominated debt and take advantage of a
benign interest-rate environment in Asia, Standard Chartered Bank
fixed income strategist Rosemary Fu said in research report.

"Factors supporting this outlook include the harsh lessons
learned by Asian corporates about the dangers of over-leveraging
on short-term U.S. dollar debt, the ongoing disintermediation
process in the region, and the increasingly discerning
international investors," according to Fu.

The disintermediation trend was spawned by a post financial
crisis credit crunch that forced issuers to replace short-term
bank loans with longer-term capital market debt issuance.

Monetary authorities in the regional also have done their part
from a regulatory standpoint to help lay the groundwork for
continued growth in local bond markets, noted Brian Verlaan, head
of fixed income strategy at Standard Chartered.

One of the important steps governments have taken is to offer
longer-dated securities to help establish a full yield curve,
Verlaan added.

The Philippines recently added a 25-year bond to its mix of
government securities, while the Monetary Authority of Singapore
announced it will expand its offering schedule to include a 15-
year bond later in the year.

Additionally, poor performing stock markets in most Asian
countries have prompted investors to increase the bond holdings
in their portfolios.

"Demand for local currency bonds will grow significantly in
2001, led by decentralization and the quest for duration,"
Verlaan said.

"In 2001, we are confident that the central banks will remain
cognizant of the need to nurture corporate bond markets through a
well-defined government yield curve, and we look forward to
broader and deeper markets in the year ahead," he added.