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.
Delegates at the IMF’s annual meetings in Bali got an uncomfortable reminder of Asia’s vulnerability to unforeseen shocks with an earthquake in the small hours of October 11. The financial markets have been doing their part, too.
Onshore renminbi bonds are poised to become the next big thing in the global capital markets, as international investors brace for index inclusion and issuers embrace the Panda bond market as an alternative source of funding. While China has rolled out the red carpet, however, international participants appear to be holding back.
Almost five years since Chinese President Xi Jinping outlined his vision for a massive infrastructure programme to strengthen China’s trading connections, the Belt and Road initiative is beginning to make its presence felt in Asia’s financing markets.
IFR held its US ECM Roundtable on September 13 as stock market indices were nearing historic highs. Investors were showing greater resolve to chase performance by participating in ECM transactions not only in the public markets but in private as well.
When Green finance first hit the market, there were high hopes that issuers raising funds in such a way would benefit from improved pricing, given the increased transparency and forecast growth in demand from investors.
IFR’s latest India seminar took place in Mumbai during a timely break in the summer monsoon rains. Over two sessions, delegates debated the outlook for Indian fixed income and the potential for Green finance, tapping into two of the hottest topics in the country’s capital markets.
The IFR Green Financing Roundtable, sponsored by the European Investment Bank, Luxembourg Stock Exchange, and White & Case, welcomed a panel of experts in green finance to discuss recent developments in Green bonds and other instruments, and to outline the next steps that need to be taken as issuance becomes more widespread.
The Philippines, the host of this year’s Asian Development Bank annual meetings, provided an ideal backdrop for a forthright debate on the role of the capital markets in funding Asian infrastructure projects.
Thomson Reuters IFR’s 2018 ECM Roundtable took place in London on April 11. It was a fascinating moment-in-time discussion that covered general market matters but more specifically looked under the bonnet of deal management and tactics, and how to get transactions over the line in the challenging environment the year had become.
The 2018 Thomson Reuters IFR Debt Capital Markets Roundtable – held in London on April 11 – took place at a very thought-provoking time. Equity and bond markets had been volatile; the US had clearly moved into tightening mode and there was talk of potentially accelerated Fed moves; while the how, when and how much of ECB tapering had been keeping market participants transfixed and the markets anxious.
The end of the first quarter of 2018 provided the ideal backdrop for a debate on the future of Asia’s credit markets. After a bumper year for Asian bonds in 2017, followed by the busiest January for international issuance on record, rising US Treasury yields and renewed diplomatic tensions have injected a note of uncertainty.
The growth of the Reg S bond market has been one of the defining trends of the Asian capital markets in recent years. Driven by the seemingly unstoppable rise of Asian wealth – especially deep-pocketed Chinese investors – US dollar bond sales in the region no longer depend on the participation of US institutions.