Emerging East Asian Local Currency Bond Markets: A Regional Update
Issue: March 2024
Financial conditions in emerging East Asia marginally improved between December 2023 and February 2024, per the March issue of the Asia Bond Monitor (ABM). This positive development was driven by expectations of monetary easing by the US Federal Reserve, as well as continued disinflation and robust economic performance in the region. The 2023 Bond Market Liquidity Survey also noted improved liquidity conditions. Local currency bonds outstanding in the region rose to USD25.2 trillion at the end of 2023, growing 9.2% year-on-year. Sustainable bonds outstanding in ASEAN+3 reached USD798.7 billion, accounting for 20.1% of the global total. Increased public sector participation led to more long-term and local currency financing in ASEAN sustainable bond markets. The ABM includes research that documents limited ESG ratings correlation among major rating agencies, suggesting the need to rely on multiple criteria to gauge the sustainability of investments.