Bloomberg News

Asia Local-Currency Bond Growth Slows in Third Quarter, ADB Says

November 29, 2011

Nov. 29 (Bloomberg) -- Growth in East Asia’s local-currency bond market slowed in the third quarter as central banks issued less bills, shifting their focus to supporting growth from curbing inflation, the Asian Development Bank said.

Outstanding debt in East Asia’s emerging markets increased 5.5 percent to $5.5 trillion as of Sept. 30 from a year earlier in local-currency terms, compared with a gain of 7.6 percent in the second quarter, the Manila-based lender said in its Asia Bond Monitor report today. The lender classifies emerging-market East Asia as China, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Most Asian central banks have either cut or kept their benchmark interest rates on hold as Europe’s debt crisis slows global growth and saps export demand. Morgan Stanley this week cut its 2012 growth projection for Asia excluding Japan to 6.9 percent from 7.3 percent.

“The global outlook facing emerging East Asia has deteriorated significantly in recent months with weaker growth now expected in Europe and an uncertain pace of recovery in the United States,” the ADB said.

Total sales of local-currency debt in emerging-market East Asia fell 19.9 percent from a year earlier to $829 billion, Government debt offerings fell 18.9 percent to $687 billion, while issuance from companies dropped 24.4 percent to $142 billion, the ADB said. The total value of outstanding sovereign debt was $3.69 trillion compared with $1.79 trillion of corporate debt.

Indonesia’s local-currency bonds led gains among Asia’s 10 biggest sovereign debt issuers in the past year, returning 15.7 percent followed by the Philippines at 9.2 percent, according to indexes compiled by HSBC Holdings Plc. Taiwan’s securities returned the least at 1.9 percent.

--Editors: Andrew Janes, Ven Ram

%VND %KRW %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.


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