Financial Institutions represent the most prolific source of deal flow

in Asia ex Japan. Issues by banks, asset managers and insurers

reached a record-high US$100 billion in 2014, which represents 60%
of the total volume. The bond market, has been and will continue to,
represent the major source where financial institutions raised
funding and match duration.
While Asias bond market has endured some tough times in 2015,
with US$190 billion of G3-denominated debt versus US$220 billion
in 2014, financial institution issuances remained resilient by
reaching a volume of US$95 billion, representing 63% of the total
issuances.
China accounted for 60% of G3 bond issuance in Asia ex Japan in
2015 as financial institutions topped all other categories in China in
issuance, selling a combined 55% of Chinas total G3 bonds in 2015.
Bank of China, stood as the single largest issuer with a total of
US$10 billion.
Similarly in Japan, issues by financial institutions amounted to 80%
of total issuance volume.
In Hong Kong, Financial institution issues totaled 56%, as
represented by XXX.
Likewise, Financial institution issues totaled 49% in Korea,
highlighted by transactions such as Woori Bank, Korea EXIM Bank
and KEB Hana Bank.
In South East Asia, financial institution issues totaled 59% in
Malaysia, 74% in Singapore and 50% in Indonesia.
As we reflect back at 2015 as a landmark year that saw abundant
deal flow in the first half of the year and a remarkable slowdown in
the second half that saw the much-anticipated first US interest rate
hike finally arriving in December. The coming year of 2016 promises
its own trials.
Banks from across Asia, but especially China, will also issue bank
capital-applicable debt and hybrid offerings due to rising regulatory
requirements and bad debts.
In November, the Basel-based Financial Stability Board said Chinas
big four banks required the same amount of total loss-absorption
capital as other institutions on its list of 30 systemically important
banks. Total loss-absorption capital are largely comprised of bonds
that sit on top of regular bank capital requirements.

That means Bank of China, China Construction Bank, Industrial and

Commercial Bank of China and Agricultural Bank of China will
require Total loss-absorption capital equivalent to at least 16% of
their risk-weighted assets, or about US$400 billion. They have until
20215 to raised the instruments.
The liberalization of Chinas currency could also offer opportunities
for international borrowers to issue Panda bonds.
HSBC and Bank of China (Hong Kong) were the first foreign
commercial banks to issue bonds in China in September 2015,
reopening the countrys RMB bond market for overseas issuers. The
government of Korea began selling RMB-denominated debt in China
in December.
Regular regional borrowers are also considering liability
management exercises to reduce their debt costs, especially if a
gradual rise in US rate leads to greater volatility in currencies and
bond yields. The Republic of the Philippines was a successful
proponent of this strategy in Jan 2015, issuing a US$2billion 3.95%
25-year bond in conjunction with a tender offer for bonds expiring in
2016, 2017, 2021, 2026, and 2031.