SINGAPORE – The growth in Asia’s bond markets is expected to remain robust, supported by strong GDP and developments on both the issuer and investment fronts.

Since the global financial crisis 10 years ago, G3 bond issuance in Asia has grown by 840% to a total of US$205 billion in 2016. Already in 2017 YTD, G3 bonds have raised US$280 billion, setting a new record high.

Speaking at The Asset 12th Asian Bond Markets Summit in Singapore, Andrew Ng, head of treasury & markets at DBS shared his views on the growth of Asia’s bond markets. “Although G3 markets are robust and deep, further development of our local currency markets will be important in the growth of the Asian economies as it would create a stable funding source when offshore markets are volatile and shut to certain issuers,” he explains at the summit.

Asian issuers, in particular, have been pushing the envelope, opting to diversify away from traditional bank funding with securitized bond structures and long-tenor project bonds coming to the market. “Project bonds allow longer term financing than traditional project bank financing, and global bond investors have demonstrated good receptivity to amortizing structures typically found in these bonds,” explains Ng.

The increasing wealth in Asia is a good sign for the region’s bond markets, as there is more capital looking to be parked in fixed-income assets.

“The Asian bond market has also seen the investor base grow rapidly with many Asian bond transactions being led or sold exclusively to Asian investors, whereas in the past, it was sold to the wider global G3 investor base,” highlights Ng.

Recent deals, such as Huawei’s 5-year and 10-year US$1.5 billion bond, and Lenovo’s dual-tranche 5-year bond & perpetual securities, were sold in the Reg-S space, indicating that Asian issuers are quite comfortable forgoing the US market.