Bankers optimistic about Asian high-yield bonds
The outlook of the Asian high-yield bond market over the near and medium-term remains positive
The outlook of the Asian high-yield bond market over the near- and medium-term is positive, fixed income market experts say.
A confluence of factors are keeping investors and issuers optimistic. "The Fed will end the rate hikes cycle. The impact of the strong dollar is fading, and China is taking off the paddle of deleverage. So the outlook is still very much positive," says Neeraj Seth, managing director and head of Asian credit BlackRock before participants of the 13th Asian Bond Markets Summit in Singapore.
A repriced Asian high yield bond poses good opportunities to both issuers and Asian investors, they note.
In 2018, high yield bond issuance volume has dropped by 35%. "Rate [hikes] have been hugely important, affecting the emerging market fund flows and liquidity. This year has been a busy. but challenging year," says Derek Armstrong, and head of debt capital market, Asia Pacific, Credit Suisse.
Raymond Chia, head of Asian credit research at Schroder Investment Management says he expects more investable papers in the future. The demand-supply dynamics and the refinancing need of issuers are driving the market.
"It [market] is like a subway station, if you missed one, there will be another train coming in in three minutes," he adds.
For reputational issuers, a repriced Asian high yield market has become a better environment to tap the capital markets, says Anthony Mathias, director and CFO of Medco Energi.
"This year we have a great bond issuance with a lower premium compared to last year. We benefited from the diversity of funding base and the access to capital. As an issuer, we do not assume the market will be better. But the size and liquidity are attracting the issuers. It is hard to not come back to the market," he says.
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20 Nov 2018