The strong appetite for G3 bonds in 2020 spilled into January this year as the volume of issuance in Asia, outside of Japan and Australasia, hit a record high US$60.73 billion, representing an increase of 23.2% compared with US$49.28 billion in the same period a year ago. This is the highest January volume ever achieved in the region in 12 years as the bond market continues to be very constructive.

According to figures supplied by Refinitiv, which is now under the London Stock Exchange Group, China, as usual, accounted for the largest amount of issuance with 39.2% or US$23.78 billion, which was up 18.2% compared with US$20.12 billion in January 2020. Other markets manifested significant increases in volume as well with the issuances out of Hong Kong more than doubling from US$6.75 billion to US$15.89 billion during the same period, while those out of Korea following suit from US$3.13 billion to US$6.69 billion.

“The large amount of supply was largely expected. Most of the deals traded well, which keep the supply going. Investors have a lot of appetite and putting money to work,” says a senior debt capital markets banker.

The increases in China, Hong Kong and South Korea offset the declines reported in Indonesia and the Philippines. The Republic of Indonesia actually kick-started the sovereign issuance out of Asia in 2021when it priced a dual-currency, multi-tranche offering totalling US$4.3 billion equivalent. Issuances from the Philippines, including that from the Asian Development Bank, fell from US$8.32 billion to US$4.49 billion and it remained to be seen whether it could match the volume it recorded for the whole of 2020, which saw the Philippine corporates accessing the offshore bond market in large numbers.

High-yield issuance in January fell 25% to US$13.75 billion from US$18.33 billion in the same period a year ago on the back of lower volumes from China, India and Indonesia. China accounted for more than half of the issuance in January at 54.8% or US$7.53 billion, down from US$9.44 billion a year earlier. The volume out of Indonesia plunged from US$2.32 billion to US$395.9 million, while that out of India fell from US$1.75 billion to US$800 million. Meanwhile, issuance out of Hong Kong bucked the downtrend, rising from US$4.82 billion to US$5.02 billion during the same period.

More issuers embraced the sustainable finance theme in January as the total issuances of green, social and sustainability bonds amounted to US$13.08 billion from 19 deals, compared with US$2.95 billion from six transactions in the corresponding period in 2020. Among the largest deals printed in January was the second green bond by Hong Kong SAR amounting to US$2.5 billion, which generated a total demand in excess of US$14.6 billion.

One of South Korea’s policy banks, Korea Development Bank, priced an SEC-registered US$1.5 billion global bond in three tranches. The three-year, five-month tranche of the deal amounting to US$700 million was labelled as a green bond, the proceeds of which will be used on projects related to the manufacture of rechargeable batteries for electric vehicles and/or the construction or expansion of renewable energy production facilities.

SK Battery America/SK Innovation also priced a green bond transaction in dual tranches totalling US$1 billion, with the proceeds earmarked for projects that provide environmental benefits relating to low-carbon transportation, energy efficiency and green buildings.