Demand for Korean bonds growing strongly in 2024: JP Morgan

In addition, there is growing demand for issuance in Asia's renewables market and also for private credit, according to senior managers at the bank.

In tough markets for Asian investors, Korea’s bond market has been growing strongly in 2024 and taking up a large portion of the issuance.  

“Korea’s bond market is growing strongly this year and has taken up 33% of the bond market in Asia, in part because the pricing differential between onshore and offshore is not significant and issuers are looking to diversify funding sources as at times onshore liquidity can be tight,” said Madhur Agarwal, head of Debt Capital Markets (DCM) prigination Asia ex. Japan, JP Morgan, speaking at a press conference in Hong Kong in June.

Overall the bank expects the bond market to finish at around $125 billion in 2024 for Asia ex. Japan, as the Chinese market gradually opens up and India continues to build momentum. 

Agarwal, based in Hong Kong, added: “While at the beginning of the year we (JP Morgan’s economists) were expecting five rate cuts in 2024, we are now expecting one rate cut in November. Investors are sitting on cash and primary supply is being oversubscribed.”

The bank is also expecting private credit to continue to grow in Asia, while sustainability bonds in Southeast Asia (SEA) are also set to become more popular. Overall, the green finance bond space is developing in Asia and growing more sophistacated. Ex Japan, Korean, mainland Chinese, Hong Kong and Indian issuers are the most active in the space. 

Puja Shah, head of SEA DCM and sustainable finance Asia ex. Japan, JP Morgan, said: “The renewables market is continuing to develop in Asia, with sovereigns and financial institutions groups (FIGs) leading the way in issuance."

Singapore-based Shah added: "We are also seeing demand grow in SEA  for sustainability bonds. The overall market in Asia, ex Japan, will be similar to 2023 in 2024.”

Shah was speaking at the same event in Hong Kong. 

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