Bond issuances increase-
The third quarter of 2012 witnessed strong growth in the bond markets of Southeast Asia, although investor sentiment remained weak due to the sovereign debt crisis in Europe and the prospect of a fiscal cliff in theUS. Bonds issued by infrastructure companies contributed partially to this growth. The following analysis is based on the latest edition of the Asia Bond Monitor (November 2012) – a quarterly publication of the Asian Development Bank (ADB).
For the third quarter of 2012 (July–September), Singapore witnessed the swiftest quarter on quarter growth of 6.1 per cent in total bond issuances among major Southeast Asian economies, followed by Malaysia (4.1 per cent) and the Philippines (3.7 per cent). These growth rates were significantly higher than those in the previous quarter. Both corporate and government bonds fuelled this growth in bond issuances.
Corporate bonds
The corporate bond markets of Singapore, Thailand, and the Philippines grew the fastest during this period in the Southeast Asian region.Singapore’s market grew by 9.1 per cent quarter on quarter, followed by Thailand(4.2 per cent), and the Philippines(3.9 per cent).
The relative size of the local currency (LCY) corporate bond market in each Southeast Asian economy can be gauged from the outstanding amounts of the corporate bonds of the top 30 bond issuers in that country. As of September 2012, the total outstanding dollar values of these bonds for the Southeast Asian countries are as follows: Malaysia$71.02 billion, Singapore$49.8 billion, Thailand$32.7 billion, Indonesia$13.76 billion, the Philippines$11.48 billion, and Vietnam$1.49 billion (for which data for 17 issuers was available). Of these outstanding bond amounts, infrastructure companies accounted for 32.31 per cent in Thailand, followed by Indonesia(28.06 per cent), the Philippines(21.29 per cent), Malaysia(14.08 per cent), and Singapore(10.31 per cent). In Vietnam, none of the top issuers was an infrastructure company.
Government bonds
In terms of government bonds, Malaysia’s market expanded the fastest at 4.8 per cent quarter on quarter, followed by Singapore(4 per cent), the Philippines(3.6 per cent), andThailand(1.3 per cent). Government bond markets grew sluggishly compared to corporate bond markets because bond issuances by central banks, which are the custodians of government bonds, moderated significantly.
The outstanding amount of Sertifikat Bank Indonesia declined by 23.9 per cent, while its stock of State Bank of Vietnam bills fell by 62 per cent. In contrast, the government bond markets ofMalaysia and Singapore experienced positive growth, predominantly due to the respective increases of the Bank Negara Malaysia (BNM) bills and Monetary Authority of Singapore (MAS) bills. BNM and MAS bills surged by 12 per cent and 31.9 per cent, respectively. InThailand, outstanding Bank of Thailand bills rose by 12.7 per cent, whereas Treasury bonds in the Philippines grew at a steady 3.8 per cent. In Thailand and the Philippines, it was observed that pension funds and insurance companies raised their holdings of government bonds.
Foreign holdings of bonds also rose in Indonesia, Thailand, and Malaysia. As of September 2012, 30 per cent of Indonesian and Malaysian government bonds and 15 per cent of Thai government bonds were held by foreign investors.
