The past year has seen something of a growth spurt for green bonds, with the market heading toward the $1 trillion milestone, according to data from the Climate Bonds Initiative and Bloomberg. It has also seen the emergence of social bonds, used for social investments with aims such as expanding access to healthcare and education. As well as significant government bond launches, there has been increased issuance from the corporate sector and from a wider range of businesses and industries.
The country’s implicit backstop to all state-linked borrowers has stymied credit and risk analysis. Abandoning it will encourage proper risk management and better bond pricing.
Recent bond defaults by China's state-owned enterprises aren't causing alarm among investors, who say the overall default rate remains low and local bonds still offer value.
Yield-hungry investors are looking to invest more in emerging market corporate bonds, which are seen recovering more slowly from the pandemic crash than those in developed markets.
The region’s ex-Japan institutional investors bought into securitisation funds and US corporate bonds while cutting stock holdings, according to the latest data from eVestment.
A combination of relatively strong economic fundamentals and appealing yields is attracting the attention of asset owners in the region and beyond.