The rebound in Asia’s bond markets may be short-lived. On the surface, a run of successful new issues and popular placements from the high-yield and emerging-market sectors is a sign that risk appetite is back with a vengeance. Dig a little deeper, however, and the disappointment of late 2018 is far from a distant memory.
The definition of insanity is doing the same thing over and over and expecting different results. Australia’s policymakers might want to keep Einstein’s apocryphal quote in mind when weighing up the proper response to the Royal Commission inquiry into financial misconduct.
This week’s Lunar New Year will usher in the year of the pig, a symbol of prosperity and optimism in Chinese mythology. After a lean year for the country’s equity markets, the latest round of reforms should help bring home the bacon.
The Chinese authorities’ decision to broaden the investor base for onshore bank capital notes has had an immediate effect in boosting demand for such securities, but it will not do much to convince anyone that China will ever allow banks to fail.
Where in the world can a road builder default on a US$600,000 debt payment when it has more than US$31m locked away in an escrow account specifically designed to service its debt?
Has China Evergrande finally figured out the Asian high-yield market? The last time the debt-laden Chinese developer sold a big US dollar bond, its existing curve took a 10-point hit. Back in 2017, the new issue slumped five points on the break. Last week, by contrast, it priced a US$3bn tap with little drama.
Only a focus on longer-term structural issues, not a short-term mercantilist approach, can shape the China-US economic relationship to the benefit of both the countries, says Dilip Parameswaran*
The Asian G3 bond market has got off to a surprisingly strong start, but it would be wrong to assume this means sentiment is going to rebound simply because people think things cannot get any worse than last year.
Talk of the death of Chinese acquisition financing has been, to coin a phrase, greatly exaggerated. The first leg of a €4.2bn (US$4.8bn) debt package for Anta Sports Products hit syndication last week, and it is already clear that market participants have both the means and motive to pursue more deals.
Asia’s equity underwriters are caught between a rock and a hard place. After a dismal end to 2018, the pressure is on to reopen markets. The right approach, however, seems to be open to debate.
Asia’s bond markets are heading for a testing time. After years of breakneck growth, a volatile start to 2019 inevitably raises questions over the sustainability of the region’s debt capital markets.