Asia-Pacific Bond Markets Flooded with Foreign Borrowers

Foreign borrowers are increasingly tapping into Asia-Pacific bond markets, driven by rising uncertainty and record borrowing. This trend is evident in the surge of 'kangaroo' bonds sold in Australian dollars, which have reached a record high of around A$60 billion this year, up roughly 40% from last year.

Other foreign issuers, such as Germany's Commerzbank, French utility Engie, Persil-owner Henkel, Singapore Airlines, and the Portuguese government, have also made their debut in these markets by selling bonds denominated in Australian dollars or China's onshore and offshore yuan for the first time.

The growth of Asian bond markets is attributed to a structural rise in demand, driven by Asia's broader financial wealth boom and Australia's fast-growing pension fund assets. Beijing's push to internationalize its currency has also contributed to growing issuance in China, making it easier to sell panda bonds and use their proceeds.

Carla Goudge, head of debt syndicate, Asia-Pacific at HSBC, notes that the markets have tipped over into being significantly more meaningful both to local names and international names. 'It's an option that simply wasn't available in such meaningful size on a regular basis a few years ago.'