(Bloomberg) -- Asia Pacific borrowers came out in full force in what’s traditionally one of the busiest periods for bond issuance globally at the start of the year, with at least 14 issuers marketing or announcing plans to sell dollar debt.
The flurry of deals will pose a key test of investor appetite for credit at a time when yield premiums are near their lowest since the global financial crisis. Mitsubishi UFJ Financial Group Inc., China Hongqiao Group Ltd. and Export-Import Bank of India are among borrowers from the region that may price notes at the start of the week.
Companies have plenty of incentives to sell debt early in 2025 with global credit spreads near their lowest in 17 years and investors on alert for more volatility in markets with the return of President-elect Donald Trump to the White House. Preliminary forecasts for high-grade issuance in the US this week were around $50 billion, with mandates continuing to roll in.
At least six borrowers Monday including Japan’s Chugoku Electric Power Co. mandated banks for potential dollar bond sales.
“We’re pretty positive on Asian high yield, Asian credit as a whole,” said Navin Saigal, head of fundamental fixed income, Asia Pacific, at BlackRock Inc., citing restrained supply in the region compared with historical highs and the ability to pick up yields of 6-7% on notes.
Concerns that Trump’s policies may reignite inflation have already pushed longer-term US Treasury yields higher and his promise to impose additional tariffs on goods from countries such as China hold the potential to sway investor preferences further in credit markets.
For now, Asia dollar bond spreads have followed their US peers lower as Chinese authorities have increased stimulus to boost their own economy and some other regional central banks have accelerated rate cuts to offset potential risks. Yield premiums on Asian investment-grade dollar bonds finished 2024 at levels near their lowest in at least 15 years, Bloomberg indexes show.
Monday’s deal rush follows a recovery in US-currency debt issuance from the Asia Pacific in 2024, with annual sales climbing 21% to about $278 billion, according to data compiled by Bloomberg. Despite that improvement, the bond sales were still about 33% lower than the five-year average of nearly $420 billion between 2017-2021, after record defaults by junk Chinese property makers and higher dollar interest rates had sapped momentum from the market.
High-yield note offerings from the region last year were still more than 70% below the 2017-2021 average, the data show.
But Chinese issuers reclaimed their place last year from Japan as the biggest group of borrowers by country of risk in dollar bond sales from the Asia Pacific in a positive sign for future issuance, data compiled by Bloomberg show.
Local-currency bond markets in the APAC region were also active Monday, with Hong Kong’s Airport Authority mandating for the possible sale of Hong Kong dollar- and yuan-denominated notes, while Commonwealth Bank of Australia priced A$3 billion ($1.9 billion) of five-year notes in its home market.
Global bond issuance this month is chasing a record-breaking January of last year. Companies and governments stormed international markets then with more than $720 billion of new debt, according to data compiled by Bloomberg.
Borrowers may try to get ahead of the new US administration, with Trump to be sworn in on Jan. 20.
If Trump focuses on tariffs and immigration in his first 100 days, “that’s a really difficult picture” for emerging market debt, said Pilar Gomez-Bravo, co-chief investment officer of fixed income at MFS Investment Management in an interview. Those policies may result in higher for longer US interest rates and a stronger dollar, she said.
“Those two things aren’t good for emerging markets” and particularly for local-currency debt, according to Gomez-Bravo. “Hard-currency emerging market debt is also extremely expensive, so you don’t have a lot of room in terms of upside.”
(Adds deal information.)
©2025 Bloomberg L.P.