SINGAPORE – Brexit is proving a boon for  Asian local currency bond market  as issuances surge in the months after the UK's decision to leave the European Union (EU).

“Post Brexit there was a surge of issuance in Asia bonds which was opportunistic,” says Sean Henderson deputy head of capital markets, Asia Pacific for HSBC during a panel discussion at the 11^th Asian Bond Market Summit  today at the Conrad Centennial Singapore.

The surge in issuances followed two bouts of volatility so far this year,  one in February when oil prices dropped and another one in the summer when Brexit happened, according to Salman Niaz, portfolio manager, emerging market fixed income team of Goldman Sachs Asset Management.

“Investors have been forced to take on a certain amount of risk to get a certain amount of yield. Where it gets more tricky is where you go down the credit curve,” Henderson added.

Going forward, more Reg S issues (bond offerings made outside the US by both US and foreign issuers) are expected to take place because of the massive liquidity in the markets.

“For newer borrowers, the decisions are harder. With a lot of liquidity in the region often Reg S makes more sense. We tend to find that smaller deals are not coming to the market that often. RegS makes sense,” Henderson says.