More than 25 years ago, it took a mere 25bp hike by the US Federal Reserve in March 1997 to tip Asia into a financial crisis three months later. Fast forward to today, with the US Fed hiking rates 11 times from 0.25% - 0.50% to 5.25% - 5.5% by July 2023, the region weathered the most aggressive rate hikes since just before the 2008-2009 market meltdown in the United States.

No doubt, there were other considerations that tipped Asia into its debilitating crisis in 1997. Similarly, other factors also played a role in the stability of financial markets in Asia during the latest rate hike cycle that began in March 2022. But one stark difference between then and now is the development of Asia’s capital markets.

In particular, financial market reforms during the more than two decades by policymakers in the region laid the foundation for Asia. Local currency bond and loan markets today are true alternatives that supported corporates in the region that needed to switch out of expensive offshore debt in favour of local currency bond markets.

This was especially notable during 2023. From a record-breaking volume of US$402.50 billion in 2021, G3 bond issuance in Asia, outside of Japan and Australasia, plunged to US$202.06 billion in 2022 and to US$172.80 billion in 2023, according to LSEG data.

With the issuance volume of G3 bonds dipping by nearly 15%, activity in the local currency bond markets grew 11%, based on Bloomberg data. Indeed, the share of local currency bond issuance crossed the 50% mark in 2022. As of 2023, local currency bond issuance accounted for 62% of total debt market issuance in Asia.

Asia Bond Monitor, published by the Asian Development Bank, which tracks the growth of East Asia’s local currency bond markets, showed Q3 2023 issuance reached US$2.5 trillion. The quarter-by-quarter growth of 8.6% was nearly double the Q2 2023 growth of 4.6%.

The buyside and the sellside active in Asia’s local currency bond markets have therefore become far more consequential, contributing not just to market development but also in providing a semblance of stability for borrowers who may find the cost of financing in the offshore market too expensive as what is the case during the past 18 months.

Asset Benchmark Research (ABR), the analytics unit of The Asset, is pleased to launch this year’s Asian Local Currency Bond Survey. As the longest-running survey of its kind in Asia, it keeps track of the latest trends and the Best of the Sellside and the Most Astute Investors every year.

In addition to the annual survey, ABR is delighted to introduce a new function, available exclusively on The Asset App. The new service allows individuals on the buyside (Most Astute Investors) and the sellside (Best Sellside Individuals) to participate in the annual voting for the best performers in Asia’s fixed income market on a real-time basis. Both the Best Sellside Individuals and the Most Astute Investors can keep track of the unweighted rankings and see who are the individuals trending in Asia’s local currency bond markets.

For more information, please visit this link or email Asset Benchmark Research at [email protected].