S&P says Asian bond fund will boost co-operation, capital markets
S&P says Asian bond fund will boost co-operation, capital markets
The Jakarta Post Jakarta
The new one-billion-dollar Asian Bond Fund will raise co- operation among the region's monetary authorities and develop Asia's capital markets, Standard and Poor's said on Monday.
"The creation of the fund is a positive development in regional financial co-operation and Standard and Poor's applauds this as a tangible step in the evolution of a regional bond market," the credit agency's regional head, Cecile Saavedra, said in a press statement.
Thai premier Thaksin Shinawatra announced last week the launch of the ABF, to be backed by 11 countries in the Asia Pacific.
The bond is the brainchild of Shinawatra and, apart from Thailand, the other participants are Indonesia, Malaysia, Singapore, the Philippines, China, Hong Kong, South Korea, Japan, Australia and New Zealand.
Central banks in Japan, the Philippines and Singapore have announced separately that they will each provide 100 million dollars to the fund, while Australia's reserve bank will contribute 50 million dollars.
"Developed countries know how to use instruments to (create) capital but countries in Asia, the majority still don't have enough access to that kind of instrument yet. This is the first step," the Thai premier said.
"Apart from returning investment to participating countries, we are creating an instrument to build prosperity for Asian countries. It's time for Asian countries to unite."
Standard and Poor's said it would take some time for the region to realize the benefits from due to the small size of the issuance and urged greater private sector participation if the capital market is to flourish.
"Although the thinking behind the establishment of this fund is commendable, the nominal size of the fund indicates that the initial practical impact will be limited," Saavedra said.
"What Standard and Poor's would like to see over the longer term is greater participation in the bond market by the private sector.
"Only with active participation by private investors and private-sector issuers will there be a vibrant and effective regional bond market."