A combination of lower interest rates, lower failures, and more securities is good for businesses and governments looking to enter Asia’s bond market in 2025.
There are hopes for Asia’s tie business next year to beat 2024 which is expected to hit$ 160-165 billion in 2024 for Asia, ex-Japan. There is a lot of willingness from banks to provide in the area as issuers prepare to enter the market, which is helping to keep extends small.
Speaking at an early December press presentation in Hong Kong, Jessica Chen, head of China DCM, creation Asia ex-Japan, JP Morgan:” General spreads are small and look extremely attractive to issuers. In 2024, China is expected to overtake Korea in terms of release ( from 2023 ) as the country’s largest business”.
Chen added:” We are expecting$ 170 billion of supply in 2025 in Asia, ex Japan with stockpile to pick up over 2024. We anticipate that this pattern will continue as some businesses mortgage next year.
Another positive factor is that regional relationship failures are declining, and that the US Fed will cut interest rates even further in the coming year.  ,  ,
Soo Chong Lim, managing director, head of Asia credit research, JP Morgan, said:” Bond default rates declined to around 4.4 % in 2024 compared with 17 % in 2023, and we expect them to decline further to 3 % in 2025″.
Despite falling interest rates in the US, anticipation are mixed regarding home bonds and the potential for some headwinds.  ,
Lim added:” We expect three]US Fed ] rate cuts in 2025 and China’s GDP to grow 3.9 % next year. There will still be market volatility, particularly for the Chinese real estate sector, which is recovering slowly after a number of years of volatility. For instance, in Hong Kong, the company occupancy rate will continue to decline as a result of the supply that enters the market.
In 2024, India – probably Asia’s best performing market– had a very powerful yr for bond issuances, a trend that is set to remain in the new year.
Puja Shah, head of Southeast Asia ( SEA ), DCM and sustainable finance Asia ex-Japan, JP Morgan, said:” The high yield bond market in India was a particular bright spot in 2024 with some large names coming onto the market. It is at$ 4.7 billion YTD, and we expect that momentum to continue into 2025 with around$ 5 billion in supply”.
The issuing of green bonds is expected to increase as well. Singapore-based Shah added:” We expect stable demand, at between 25-30 % of issuances, for sustainable ( green and social ) bonds next year in the region, compared with 25 % in 2024″.
¬ Plaza Media Limited. All rights reserved.