Asia Firms Await More Stability to End Lull in Dollar Bond Sales


(Bloomberg) -- A slew of rescue measures from global central banks and nations amid the global Covid-19 crisis might have revitalized U.S. and Europe primary bond sales. In Asia though, dollar issuance remains in freeze.

Issuers in the region are waiting for the wild swings in the financial markets to end, with an eye also on whether the premium to borrow dollars in Asia show any indication of going down after a recent rise.

Here’s what bankers are saying about Asia’s dull primary market activity in dollar bonds:

Terence Chia (Credit Suisse head of debt syndicate, Asia Pacific)

  • There would have to be some stabilization in equity markets and a further easing of liquidity, among the key parameters Asian issuers are watching before they start tapping the primary market again
  • More normalized secondary market trading levels for issuers and their peers, and more reasonable new issue premiums will also help

Clifford Lee (DBS Bank global head of fixed income)

  • Issuers in Asia also do not see adequate conviction in the market for them to price a trade
  • We will need a longer period of stability to re-open the primary markets

Avinash Thakur (Barclays Capital head of Asia Pacific debt origination)

  • Spreads are fairly elevated and Asian issuers are driven with a tighter pricing; they are not looking at offshore bonds for now as other options such as bank loans are available
  • During 2H last year and earlier this year, a lot of issuance happened from Asia and most of this was pre-funding for the time to come; that borrowing has and will sustain companies for the next three to six months
  • Asian issuers may start coming back if the current rates -- which are higher than where they were a few months back -- become the new normal

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