Asia ex-Japan debut bond issuance takes a hit in 2018

Asia ex-Japan's bond market took a big hit in terms of variety of issuers, with both volume and deal counts from first-time issuers fell to their lowest levels in five years.

Asia ex-Japan's debt capital markets experienced one of the best years in 2018 in terms of issuance volume in the international market. Last year, total bond issuance amounted to $349.7 billion, trailing only 2017 when a record-breaking $414.3 billion worth of bonds were issued.

However, it was not as promising as it may seem in terms of variety of issuers.

This is because debut bond issuance dropped by over one-third year-on-year in 2018, with $35.99 billion issued compared to $56.53 billion in 2017.

The number of bond deals from first-time issuers dropped to 103 last year, down from 131 in 2017.

Both volume and deal counts hit five-year lows, a sign that the Asia ex-Japan bond market was struggling to find new issuers and that it was supported largely by the same group of enterprises and government entities which tapped the market before.

In addition, the average deal size from first-time issuers fell to $349.4 million, the lowest since 2011, indicating that large entities are not as interested to tap the market for the first time.

Asia DCM debut issuance



Despite the relatively low debut issuance, the solid progression of green bonds in the region continued to track upwards.

Green bond issuance saw the highest numbers of inaugural issues with 21 deals, raising $6.95 billion in funds.

The variety of issuers of green bonds was a highlight last year, as the Indonesian government, Korea Housing Finance Corp, LG Display, Bank of China (Hong Kong) and New World Development entered the green market.

Indonesia was also the standout country last year with overall debut bond issuance increasing almost six-fold year-on-year to a record high of $9.51 billion through 10 deals.

This was mainly fuelled by the $4.0 billion mega-deal from Inalum to fund its copper mine acquisition.

Inalum sold a tranche of three-year bonds at a yield of 5.23%, five-year bonds at 5.71%, 10-year bonds at 6.53% and 30-year bonds at 6.757%.

From the current pace of activity so far this year, it will be interesting to see if last year's trends in Asia's green bond markets will continue in a similar direction this year.

Asia debut volume by country

Asia DCM Debut Issuance

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