Asian Dollar Bond Issuance Predictions

By Scott Murdoch
SYDNEY (Reuters) – Asian dollar bond issuance is expected to rise around 20% in 2025 over last year, driven by Chinese debt deals and as U.S. interest rate cuts make it more affordable for companies to issue dollar bonds rather than local currency debt.

In the first few days of 2025, at least $6 billion worth of dollar bonds were issued, according to LSEG data and term sheets reviewed by Reuters. Deals have been priced by the Export Import Bank of Korea and aluminium producer China Hongqiao Group.

> “We are expecting about a 20% increase in dollar bonds out of Asia, not taking into account Japan or Australia, to reach about $220-$225 billion in 2025,” said Rishi Jalan, Citigroup’s Asia Pacific debt syndicate head. Around $175 billion worth of dollar bonds were issued in 2024.

> “To reach that level, a lot of guns will have to fire to meet that volume,” he added.

Therefore, significant contributions will be needed from major Chinese tech firms and a resurgence in issuance from India, where local currency debt has dominated the market.

Increased dollar issuance helps fund Asia-based companies’ expansion and raises fees for major investment banks acting as bookrunners.

Higher U.S. interest rates over the past two years had made it cheaper for many companies in Asia to issue bonds in their currencies or rely on domestic bank funding. However, the Fed has reduced the policy rate by a full percentage point over its last three meetings of 2024, and it is expected to maintain this range of 4.25% to 4.5% in its next meeting on January 28-29.

Chinese technology companies are predicted to lead the surge in dollar debt issuance this year. Notably, e-commerce firms Alibaba and Meituan raised $7.5 billion via dollar bonds late last year, partly to pay off existing debt and fund future growth. Bankers expect this trend to continue in 2025.

Driving Force

China, a key driver of the dollar debt market in Asia, issued $77.1 billion worth of dollar bonds in 2024, marking an 81% increase from the $42.5 billion raised the previous year. However, this remains below the 2019 peak of $210.5 billion.

> “High grade Chinese companies are able to issue now, and they’re more comfortable with current rates compared to 2023 and early 2024,” said Avinash Thakur, head of capital markets financing at Barclays (LON:BARC).
> “There will be issuance in tech to meet funding requirements and in the industrial sector.”

Conversely, the troubled property sector, which was a major issuer of junk bonds before the 2021 debt crisis, is not expected to return to the markets soon due to ongoing turmoil.

> “The sector is still under pressure, property prices continue to fall, and debt levels are high,” Thakur added.

In South Korea, dollar bond issuance rose 14.5% in 2024 to nearly $50 billion, but ongoing political instability may lead investors to avoid this market, according to Jini Lee, a partner at law firm Ashurst.

> “Investors looking to diversify from U.S. investments may choose India and Korea, but due to pessimism towards China, other Asian markets have become more attractive to foreign investors,” said Lee, adding that some may wait for political stability in South Korea before investing, which could mute the market temporarily.