1. Objective
The ASEAN+3 Asian Bond Markets Initiative (ABMI), which was endorsed at the ASEAN+3 Finance Ministers Meeting in Manila, the Philippines on 7 August 2003, aims to develop efficient and liquid bond markets in Asia, enabling better utilization of Asian savings for Asian investments. It would also contribute to the mitigation of currency and maturity mismatches in financing.
2. Focus
Activities of the ABMI focus on the following two areas:
i. Facilitating access to the market through a wider variety of issuers
A robust primary and secondary bond market in Asia requires a wide variety of issuers and products that could be addressed by encouraging:
- Sovereign bond issuance by Asian governments to establish benchmarks;
- Asian government financial institutions to issue bonds in Asia to meet their financing requirements;
- The creation of asset-backed securities markets, including collateralized debt obligations (CDOs);
- Bond issuance in the region by multilateral development banks and government agencies;
- Bond issuance in the region for funding foreign direct investment in Asian countries; and
- The expansion of local currency-denominations of bonds and the introduction of currency-basket bonds.
ii. Enhancing market infrastructure to foster bond markets in Asia
To develop efficient and deep domestic and regional bond markets, there must be an environment conducive to active participation by both issuers and investors. In this context, the following issues merit further consideration:
- Provision of credit guarantees through the active use of existing guarantors, and the possible establishment of an Asian Regional Guarantee Facility;
- Strengthening of the rating system by enhancing the role of domestic rating agencies, as well as considering the possible establishment of an Asian Credit Rating Board;
- Establishment of a mechanism for disseminating information on issuers and credit rating agencies;
- Facilitating foreign exchange transactions and addressing settlement issues on cross-border transactions;
- Enhancing capacity building by conducting market research and technical assistance programs to promote policy dialogue and human resources development among member countries; and
- Examining legal and institutional infrastructure, such as company/corporate laws, securities transaction laws and tax laws.
3. Activities Working Groups At the ASEAN+3 Finance Ministers’ Meeting (AFMM+3) on August 7, 2003, six voluntary working groups (WG) on the ABMI have been established to address key areas of bond market development namely, (i) WG1 New securitized debt instruments, (ii) WG2 Credit guarantee and investment mechanisms, (iii) WG3 Foreign exchange transactions and settlement issues, (iv) WG4 Issuance of bonds denominated in local currencies by Multilateral Development Banks (MDBs), foreign government agencies, and Asian multinational corporations, (v) WG5 Rating systems and information dissemination on Asian bond markets, and (vi) WG6 Technical assistance coordination.
Since the establishment of the six WGs, comprehensive efforts have been made to develop the region’s bond markets. ASEAN+3 officials have conducted regular dialogues and discussions among themselves as well as with academics, think tanks and the private sector, to exchange views, through various meetings, seminars, forums, and symposiums. Concrete outcomes are also being achieved, such as the issuance of local currency denominated bonds by MDBs in the region. Simultaneously some of the WGs have completed the designated tasks. Based on these developments, AFMM+3 on 4 May 2005 in Istanbul, Turkey endorsed the reorganization of the ABMI WGs and the following changes occurred accordingly:
- Establishment of the Ad-hoc Support Team for the Focal Group (ASTFG) and transfer of the role of promoting information dissemination from WG5 to ASTFG;
- Conclusion of the operations of WG4 on local currency bond issuance by MDBs, etc., upon completion of the group’s mission;
- Renaming WG5 on rating systems and information dissemination as WG4 on rating systems; and
- Conversion of WG6 to TA Coordination Team for the Focal Group (TACT).
| ABMI Working Groups | Chair | Changes | | WG1 New securitized debt instruments | Thailand | | | WG2 Credit guarantee and investment mechanisms | Korea and PRC | | | WG3 Foreign exchange transactions and settlement issues | Malaysia | | | Issuance of bonds denominated in local currencies by Multilateral Development Banks (MDBs), foreign government agencies, and Asian multinational corporations | PRC | Conclusion of the operations upon completion of the mission | | WG4 Rating systems | Singapore and Japan | Used to be Rating systems and information dissemination on Asian bond markets | | Technical assistance coordination | Indonesia, Philippines and Malaysia | Converted to the TACT |
Focal Group
AFMM+3 on 15 May 2004 in Jeju, Korea confirmed the establishment of a Focal Group (FG) to coordinate the work of ABMI working groups. The first FG meeting was held on 19 March 2004 in Manila and, since then, FG meeting has been held biannually.
The immediate focus of the FG is to monitor the progress of the ABMI working groups and to coordinate their future action plans. This includes: - Drafting of a summary progress report of the ABMI to be submitted to the ASEAN+3 Finance Ministers' or Deputies' meeting;
- Providing a progress update for each working group;
- Coordinating meeting schedules of the working groups;
- Sharing future plans of the working groups.
The progress reports of ABMI are provided at the links below. For reference, progress reports of the concluded WG on Issuance of bonds denominated in local currencies by MDBs, etc., are also linked below. Details on the progress reports of each working group can be found in the respective working group pages. |
