High-yield bond sales from emerging Asia are expected to rise in 2004 to their highest since the Asian financial crisis of 1997/98, bankers say. US interest rates at 46-year lows and global economic optimism have encouraged investors to buy high-yield emerging market bonds and prompted many lesser known companies to tap the market for the first time.
Bankers and analysts expect the pace of regional high-yield bond issues to pick up in the second half of 2004 when elections in several Asian countries, including India, Indonesia and the Philippines, will have been completed, eliminating an element of market uncertainty.
Non-investment-grade Asian borrowers, or those rated below BBB, have raised more than $3.8 billion in the first three months of the year, more than half the $6.05 billion raised for the whole of 2003, according to figures from research company Dealogic. And Barclays Capital estimate non-investment grade issuance from Asia, outside of Japan, could hit $9.0 billion this year, surpassing the $6.82 billion issued in 1997, the highest rate in the last 10 years.
Indonesia's fifth-largest bank, PT Bank Danamon Tbk, could be the next to tap the market. It is expected to price $150 million to $300 million in 10-year subordinated bonds after it completes presentations in London this week.