South-East Asian Bonds Seek 8 Straight Year Record High

Southeast Asian companies are on track for an eighth straight year of record bond sales as local investors provide protection from a repeat of 1997, when the region’s currencies collapsed and global banks fled.

Bond sales will rise as much as 20 percent from last year’s $101 billion of local and dollar-denominated notes, according to CIMB Group Holdings Bhd. (CIMB), the top underwriter of domestic debt in the 10-member Association of Southeast Asian Nations, or Asean. DBS Group Holdings Ltd. and Maybank Kim Eng Holdings Ltd. see a repeat of last year’s 48 percent gain. PTT Global Chemical Pcl (PTTGC) of Thailand’s and PT Bank Rakyat Indonesia, the nation’s third-biggest lender, are lining up to sell debt.

The Thai baht is among the top five holdings in the Asia-Pacific Sovereign Open plan at Kokusai Asset Management Co., the manager of Japan’s largest mutual fund. Photographer: Brent Lewin/Bloomberg
Enlarge image Record Bond Sales Showing Lessons of 1997 Learned

Nomura Holdings Inc. and JPMorgan Chase & Co have set up new debt capital markets units to focus on Southeast Asia in the past five months. Photographer: Kiyoshi Ota/Bloomberg

The combination of higher yields, faster economic growth, and an expanding pool of wealthy investors is proving irresistible to the world’s biggest fund managers. New bond issues increased five-fold since 2000 as Asean governments transformed markets since the crisis 15 years ago, when tumbling currencies froze credit, forcing Thailand, Indonesia and South Korea to borrow more than $110 billion from the International Monetary Fund.

Bloomberg

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