The past 12 months have proved to be Asia's best ever in the bond markets, with record issuance and all-time low spreads. A potent cocktail of historically low interest rates, a strong cyclical economic recovery and markets drenched in local and overseas liquidity made for quite a party. One of the favourite party games of international investors was the carry trade ? borrowing cheap dollars and investing them overseas in higher-yielding investments ? and Asia's bond markets have been one of the favoured venues.
Over the year, yields on Asian debt narrowed to wafer-thin spreads over treasuries as investors gorged themselves on Asian issues. Asian borrowers, investing into a strong economic recovery and in search of capital, were quick to tap the flood of money, and landmark deals became the order of the day.
Best sovereign borrower
Nothing exemplifies the strength of the recovery in Asian emerging-market debt better than Pakistan's stunningly successful $500 million five-year Eurobond launched in February. It would not appear at first blush to be the kind of issuer to whet the appetite of international bond investors.