The international bond market in the Asia ex-Japan region has witnessed rapid growth in the past five years, expanding at a compound annual growth rate (CAGR) of 20.5 per cent to touch $264 billion in 2014. Indian companies haven’t been left far behind in the race to raise funds from plush foreign investors, but Chinese firms clearly dominate the regional market, according to a report by financial services provider RBS. The Chinese firms cornered approximately 49 per cent of the funds raised through international bonds in the Asia ex-Japan region in 2014, compared to just 7 per cent in the case of the India Inc.

The quantum of funds raised by India was muted in comparison to South Korea-based bond issuers — who raked in 13 per cent of the total funds raised — but was almost at par with the volume of fund-raising conducted from the financial havens of Singapore and Hong Kong (8 per cent each of total funds). That put Indian firms on a better footing than the Philippines, Indonesia and Thailand, besides other countries that floated international bonds during the year.

The data indicates that the US dollar was the currency of choice for fund-raising through bonds during the year, accounting for approximately 72 per cent of all international issues.

Gaining traction

But Singapore dollar, Chinese yuan, euro and Australian dollar-denominated bonds are also gaining traction, which demonstrates the development of an alternate currency base for issuers. Investment grade bonds accounts for the bulk of the bonds floated, at 85 per cent, which is attributed to the significant tightening of credit spreads.

And while sovereign issuers made their presence felt, with Government-issued bonds constituting 6.4 per cent of the issuances , corporates represented the majority of issuers.

Related Topics