Whenever an asset class sets a new record, people inevitably start to wonder whether a bubble is about to burst. Asian high-yield issuance had its best year on record in 2019, fuelled by the global low interest rate environment and a hunt for yield. So far, however, there are no signs of overheating. One of the main drivers of this year’s huge issuance volume was the massive refinancing requirement for Chinese property companies, and the amount of maturities next year is even higher.
IFR held its US ECM Roundtable on October 24 as stock market indices were nearing historic highs.US equity capital markets have enjoyed a banner year in 2019, at least in terms of volume. Private unicorns have begun their long-awaited transition under the public markets, driving IPO volumes to new levels. Biotechs, a sub-sector of that transition, have found a good reception for their funding needs, and foreign companies are offering US investors a growing array of opportunities.
It is now very clear that UK and US regulators want market participants to transition away from Libor by its phase-out at the end of 2021, predominantly because it is a not based on transactions whereas replacements SOFR and Sonia are. Despite the US being the centre of global finance a surprising amount of action is happening in the UK’s Sonia market. It feels somehow appropriate that new issuance of Sonia-linked bonds has set a blistering pace; an endorsement that the sterling market’s designated new risk-free rate (RFR) is ready to replace Libor in a couple of years’ time.
Green finance may have initially been treated as a niche product or a marketing gimmick, but it is becoming harder to ignore. In Asia, the market for environmental, social and governance investment seems to be at a turning point. Blue-chip companies like Olam International and Frasers Property report overwhelming demand when they seek to borrow in green or sustainable format, but many issuers and investors have yet to begin their journey.
Welcome to the IFR/LPC Samurai Loans Roundtable. The event, held in Tokyo on August 27, drew strong interest from market participants with around 140 people attending. It brought together the three Japanese mega banks, regional banks in the country and foreign borrowers in a discussion covering the trends and outlook for Samurai and Ninja loans.
Green finance has become one of the most important themes driving global finance. It has captured the attention of banks, companies, investors, governments and the general populace. And it continues to gather pace as the notion of a climate emergency demanding urgent action increasingly takes hold.
The skies have cleared, and Asian credit is on a roll. After the end of 2018 produced one of the stormiest periods in years, the retreat of major headwinds has helped cement a solid backdrop for Asian bonds at the start of 2019. The US Federal Reserve has slammed the brakes on monetary tightening, trade tensions have subsided for now, and market stability has become a top priority for China as it wrestles with deleveraging its economy.
Sustainable infrastructure was high on the agenda at this year’s Asian Development Bank annual meetings in Fiji, where climate change and ocean health have a pronounced impact on everyday life. The capital markets are also showing a growing interest in sustainable development, but Asia is still a long way from harnessing the market’s full potential.