Emerging East Asian Local Currency Bond Markets: A Regional Update
Issue: June 2024
Financial conditions in emerging East Asia deteriorated as investor risk appetite waned amid expectations of higher-for-longer interest rates. Slower than expected disinflation delayed rate cuts in the United States and pushed up bond yields in advanced economies and the region. Higher-for-longer interest rates overshadowed the regional market, as issuance in local currency and sustainable bond markets fell in the first quarter of 2024, according to the Asia Bond Monitor June 2024. Local currency bond issuance tallied $2.2 trillion in emerging East Asia, a contraction of 9.0% quarter-on-quarter (q-o-q), with bonds outstanding amounting to $24.7 trillion by the end of March. Similarly, sustainable bond issuance in ASEAN+3 contracted by 13.3% q-o-q to $49.7 billion, with the outstanding sustainable bond stock reaching $805.9 billion by the end of March.