CORPORATE BONDS

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.

Increased global liquidity, Asia’s growing wealth and the rise of the regional investor base have made the US$ Reg S market an increasingly important source of funding for Asia Pacific issuers. NAB sees US$ Reg S issuance from Australian corporates tripled from 2016 to 2017, with ample room to grow.

US$90 trillion in new investments by 2030 have been estimated as necessary to meet the goals of UNCOP21 to address climate change. National Australia Bank (NAB)’s David Jenkins says the opportunity for green bonds to mobilise capital for this transition to a low carbon economy is immense.

The Queensland Government’s first social bond that seeks to reduce reoffending by young people has been launched by Life Without Barriers and NAB.

After the recent investor jitters triggered by the failure of some Public Private Partnership (PPP) toll roads, it looks like a new wave of infrastructure PPPs, kick-started by Federal and State Government investment, are making a strong comeback.

The AUD bond market is not just one market. It’s, at last count – at least six markets with their own features, documentation and target investors.

The nation’s first Sustainability Bond demonstrates how the corporate and education sectors can partner to address pressing issues facing our society and environment.

Any examination of the Asia-Pacific region’s capital requirements, whether by a government, issuer or investor, must begin with the acknowledgement that demographic and financial pressures mean countries can no longer ‘go it alone.’

In terms of market moves, most action happened in bonds. The bond sell-off continued overnight, underpinned by a weak French 30-year bond auction.