Asia-Pacific Bond Markets Soar as Foreign Borrowers Flock In

Foreign borrowers are increasingly turning to Asia-Pacific bond markets as a way to diversify their funding sources and tap into growing demand from investors in the region. The trend has led to record-high sales of bonds denominated in Australian dollars, Chinese onshore yuan, and offshore yuan.

The LSEG reported that 'kangaroo' bond sales by foreign issuers in Australian dollars reached a record high of around A$60 billion (US$42 billion) as of late July, up 40% from the same period last year. Hong Kong dollar issuance is also at an all-time high.

Chinese onshore 'panda' and offshore 'dim sum' yuan bond sales reached record highs of around 160 billion yuan (US$24 billion) and 350 billion yuan respectively in the first half, more than doubling compared to this time last year. The surge is largely driven by international borrowers.

Hampus Falth, head of debt capital markets syndicate EMEA at Mizuho, attributed the trend to a structural rise in demand for borrowing in Asian currencies, which reflects growing financial wealth and investment opportunities in the region. Bankers are advising clients to act early and diversify their funding sources as competition for capital grows.

China's push to internationalize its currency has also contributed to the growth of dim sum bond sales, making it easier for investors to access Chinese assets. The trend is expected to continue, with Brazil set to sell its first-ever panda bond later this year and Kenya eyeing the market.