Asia Pacific bond markets can be further strengthened: Moody's

The past dozen or so years have witnessed impressive growth in bond issuance in emerging Asia

October 10, 2013 11:11 IST | India Infoline News Service
Moody’s Investors Service’s managing director and regional head of the Asia Pacific region, Min Ye, today said that while Asian bond markets have grown rapidly, particularly since the global financial crisis of 2008-09, more needs to be implemented to strengthen them.

Moody's recently released a report titled–“The Next Phase of Bond Market Development in Asia-Pacific”. The report discusses the progress made to date in developing local currency bond markets and the steps that are necessary to take this development to its next phase.

Between 2000 and 2013, the stock of local currency bonds outstanding in emerging Asia grew to $6.7 trillion from $633 billion. China is the largest local currency bond market in the region, with a debt stock of $4 trillion, or 59% of the total as of June this year. South Korea is the second largest, with $1.4 trillion, or 22% of the total.

“It is particularly important to encourage the growth of corporate debt markets, to support the growth in primary issuance,” Ye added.

“Asian bond markets should also have deeper, more liquid secondary markets, and should encourage more cross-border activity,” Ye further said.
Ye was speaking on 5 October at this year’s APEC CEO Summit Indonesia 2013 and was part of a Moody’s delegation which included Moody’s Corporation CEO Raymond W. McDaniel.

Ye proposed four steps to further develop Asia’s bond markets. These include developing depth and liquidity in the secondary market, developing risk management products, strengthening investor protections and legal infrastructures and diversifying the investor base.

According to Ye, the need for action is growing more urgent. As the search for yield begins to diminish in investor decisions, it is all the more important to focus on fundamentals and on building the market infrastructure for the next stage of development.

Moody's Investors Service is a leading provider of credit ratings, research, and risk analysis.

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