Debt bankers in Hong Kong and Singapore are having more and more late nights. But rather than wasting the twilight hours at the local drinking hole, many are stuck at their desks waiting for a call from the other side of the Pacific. The reason: success or failure of Asian bond sales – which used to be a predominantly local affair – is increasingly influenced by appetite from credit investors in the US.
China’s Baidu was among the first Asian borrowers to capitalise on interest from US investors. It sold $1.5bn of bonds directly to US-based funds in late 2012. It had the natural advantage of being a New York-listed company in a sector well known and understood by local portfolio managers: internet search. Such deals are still rare, but it signalled the beginning of an important, if slow, shift in the development of Asia’s debt markets.
Most Asian bond sales involve a significant local element – often domestic life insurers and pension funds – and usually a sizeable European leg. Few companies have been able to copy Baidu’s example and sell a US-only deal, as defined by the type of regulatory regime a bond is designed for. A US deal must meet “144a” legal standards, while European and Asian sales require “Reg S” regulations.