Asia's appeal as multi-trillion dollar bond hub is set to accelerate as the region primes itself to become a key alternative funding source for investors, said the chief financial officer of the $147 billion Temasek Holdings.
Leong Wai Leng, chief financial officer of Temasek Holdings, said the market expects some US$17 trillion of public debt refinancing and budget funding obligations to come due from US, UK, Japan and Eurozone over the next three years.
"The Asian and Singapore bond markets would provide corporate issuers alternative markets to meet their requirements," he said at a recent Asian Bond Markets Summit in Singapore.
Bond markets in the east have become increasingly attractive particularly to institutional investors as Asian countries boast healthier balance sheets compared with their Western counterparts.
Despite the GFC, outstanding Asia bond market issuances (excluding Japan) totaled around US$5 trillion at the end of last year. The figure is nearly 15 times the level at the start of the Asian financial crisis in 1997.
According to Asian Development Bank figures, the total outstanding Asian issuance (ex-Japan) continued to grow to over US$5.5 trillion as at the end of the first half of this year.
Temasek issued ten bonds totaling almost S$8 billion ($6.3 billion) between October last year and July. Six were denominated in Singapore dollars, two in US dollars, two in Sterling.
Including its maiden US dollar bond issued in September 2005, the fund has 11 outstanding bonds totaling over S$10 billion ($7.9 billion).
"These issues allowed us to establish our Singapore dollar, US dollar and Sterling yield curves, and extended our debt maturity curve to 40 years up to 2050," said Leong.
Temasek launched its bonds to broaden its investor base and to boost Singapore's bond market. Besides Temasek, Singapore Telecoms, Singapore Airlines, and Malaysian sovereign wealth fund Khazanah have all issued bonds this year in excess of $400 million each in size.