Offshore bond volumes in Asia rose 22% last year, as a positive fourth quarter set January up for a booming start.

About US$260.4bn of G3 bonds were sold in Asia Pacific ex-Japan during 2024, surpassing the US$213.2bn in 2023, according to LSEG data. Citigroup topped the league table with a market share of 8.2% and nearly US$21.5bn in volume. HSBC was close behind with a 7% market share, followed by JP Morgan, Bank of America and Credit Agricole.

The fourth quarter ended up being busier than expected as a clear and quick result to the US presidential election in early November helped avoid uncertainty that otherwise could have kept borrowers away.

“A lot of issuers, including the likes of Alibaba … had these jumbo trades go out and get done,” said Rishi Jalan, head of APAC debt syndicate at Citigroup.

Alibaba raised US$5bn-equivalent in US dollar and renminbi bonds at the end of November after three years away from the market. The deal illustrated the balance of US dollar and local currencies that issuers are expected to continue to go for this year as they seek affordable funding. Airport Authority Hong Kong took a similar approach to sell US dollars, Hong Kong dollars and renminbi bonds over two days of the new year to raise a total of US$7bn-equivalent.

The year-end boost was helped by a recognition that rates could be higher for longer. “You saw the combination of a very attractive spread environment [and] I think that the Trump trade to a certain extent put expectations of issuers in balance,” said Adrian Khoo, head of Asia bonds at Citigroup.

The US Federal Reserve’s December meeting backed this up, with indications that rate cuts in 2025 will be slower than previously expected. The 10-year US Treasury yield ended the year at 4.58%, up from 3.88% at the end of 2023, and has continued to rise.

“Spreads are very tight while there is worry that rates could go up further, which is what is driving issuance volume in January,” said Madhur Agarwal, head of Asia ex-Japan debt capital markets origination at JP Morgan. He expects close to US$50bn in new issues in APAC this month as borrowers rush to get ahead of the Lunar New Year holiday that will start on January 29.

Bankers are optimistic about deal flow, with estimates varying from a 10% to 25% pick-up this year over 2024 volumes.

Bankers anticipate the first quarter to be dominated by the usual early borrowers, such as sovereigns and banks, but there is also expectation that the year will see more from Chinese corporates, debut borrowers, high-yield names and Indian issuers.

High-yield borrowing was a highlight of 2024, as the return of some names and debut of others produced the strongest volume since the collapse of the Chinese real estate sector. Fourth-quarter deals included a tap from Mongolia’s Golomt Bank, which was back for a private placement in January as well. Dan Kim, co-head of DCM for Asia Pacific at HSBC, said the return of high yield could help drive a big increase in overall volume in 2025.

“It’s not 100% bull run yet,” he said, “but we’re pretty positive.”

The high-yield pipeline for 2025 has started well, with China Hongqiao Group and Fosun International selling US dollar bonds to a strong reception. Vietnamese developer Vinhomes is meeting with investors for a debut deal to come.

“The global economy, especially in the US, does not seem to be going into recession soon and is holding up,” said Ed Tsui, head of APAC DCM and syndicate at Deutsche Bank. “In this scenario, despite tight credit spreads, investors are comfortable in investing down the credit curve.”

Source: IFR