Outlook for Asian Credit 2009
IFR Asia magazine issue 585 special report (February 7 2009)Outlook for Asian Credit 2009
The global financial crisis has come to Asia and 2009 looks set to be a year of pain for Asian economies. If optimists were talking a year ago about how Asia had decoupled from the US and European economies, today they understand more fully what it means to live in a globalised word.
Asia's big slump
Economic growth in Asia is expected to slow sharply this year, ending a decade of stellar growth, as the global recession hurts exports and domestic demand weakens. “We are heading for a very bad year and it’s going to be worse than the downturn experienced in the 2001 dot-com bust,” said Claire Innes, Asia Pacific economist at Global Insight, who said Asia would grow at it slowest for 18 years.
Bond markets dance to domestic beat
The relative dynamic of G3 bond issuance from Asia and issuance from the region’s domestic markets was placed in stark relief last year when offshore public G3 primary markets slumped to a US$22.8bnbn-equivalent print versus an average of US$43.5bn-equivalent over the past five years, while domestic markets produced US$58.4bn-equivalent of issuance against an average US$41.6bn over the same period. The trend should continue this year.
Recession-struck Asia to face IPO shortage in 2009
Depressed equity prices, a spreading global recession and increasing risk-aversion among investors are likely to kill the motivation for Asia Pacific companies to be audacious enough to launch IPOs in 2009. The IPO pipeline, which had dried towards the end of 2008, will probably completely shut in the first half of 2009 and the most optimistic are now only hoping that stability will return to stock prices and that a few listings will follow in the second half of the year.
Tough year looms for securitisation
There is no doubt that securitisation will face a tough year in Asia in 2009. "Issuers should get used to the fact that funding is a privilege not a right," warned William Ross, head of capital markets, structured finance at HSBC in Hong Kong.
Bracing for a slowdown
The impact of the financial turmoil on global capital markets is already translating into pain for Asian loan markets with 2009 expected to experience a significant drop in volumes. Whatever little activity that takes place will come through club-style top-heavy financings and amendments and waivers.