Asian bonds are a firmly established, resilient asset class. From the early days of the Asian financial crisis, through the 2013 taper tantrum, and on to the ongoing Covid-19 pandemic, Asian bonds have not only withstood market stress and volatility but have become more attractive than ever to global investors, making them an important part of most investment portfolios.
For Asia’s fixed-income markets, environmental, social and governance (ESG) continues to be a prominent theme, boosting demand for green, social and sustainability (GSS) bonds and the emergence of sustainability-linked bonds (SLBs), which are likely to follow their GSS counterparts into the mainstream. And, as a result, as investors favour issuers with stronger ESG credentials, borrowers with low scores will likely find it challenging to access the fixed-income market. As well, the Chinese issuer-dominated Asian high-yield space is expected to broaden with potential issuers from other parts of the Asia-Pacific looking for market access.
However, Asia’s uneven economic recovery on the road to normalization will likely continue with inflationary concerns, worries over new virus variants, off and on lockdowns, the expected Fed tapering, rising US interest rates and increasing bond defaults challenging the investing outlook. Amid this backdrop, Asia’s strong credit fundamentals will offer a firm foundation for the region’s fixed-income markets, and moving forward, bring credit differentiation to the fore.
The Asset Events+, is pleased to be hosting the 17th Asia Bond Markets Summit. The annual gathering of thought leaders and industry participants will discuss how issuers and investors are navigating the market in the Covid-19 world.