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Monday, 10 December 2018

A roundtable report with IFR Asia magazine 1036 (April 14 2018)

IFR Asia Outlook for Asian credit Roundtable 2018: As good as it gets?

IFR Asia Outlook for Asian credit Roundtable 2018: As good as it gets?

IFR Asia 1036 - Outlook for Asian Credit RT 2018

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.

IFR Asia Outlook for Asian credit Roundtable 2018 Group Shot

IFR Asia Outlook for Asian credit Roundtable 2018: Roundtable participants

IFR Asia 1036 - Outlook for Asian Credit RT 2018

Paul Au

IFR Asia Outlook for Asian credit Roundtable 2018: Part 1

IFR Asia 1036 - Outlook for Asian Credit RT 2018

IFR ASIA: Welcome everyone. Michael, perhaps you can kick us off with your sense of what’s changed since we sat down 12 months ago. What’s different this time around?

IFR Asia Outlook for Asian credit Roundtable 2018: Part 2

IFR Asia 1036 - Outlook for Asian Credit RT 2018

DESMOND HOW, GAOTENG: This is also why domestic CNY bonds are regarded more as a rates product than a credit product, as Paul mentioned. A big part of it is because credit differentiation is very low. Everything that is not Triple A will be high Double A. It doesn’t make a lot of sense to foreign investors. And the default rate, traditionally, has been low. There was a small spike last year, but even then, we’re talking about less than 1%. And if you look at this year’s onshore debt that’s maturing, one house alluded this figure of CNY5 trillion, or CNY3 trillion without puts. It’s a huge amount to refinance, and right now the onshore market is not conducive. Over the past two years, the NDRC (National Development and Reform Commission) has played a very big part in deciding how much a company can issue onshore or abroad.