NAB’s DCM Conference summarises the massive and unprecedented transformation of the Asia-Pacific region means debt capital markets must evolve to match.
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Asia-Pacific debt capital markets: Evolving to support a region in transformation (PDF, 1.1 MB)
The massive and unprecedented transformation of the Asia-Pacific region, driven by demographics, growing wealth and technological innovation, and reshaping economies, society and infrastructure alike, means debt capital markets must evolve to match. This was the central theme that emerged from the recent National Australia Bank (NAB) 2017 Asian Debt Capital Markets Conference, attended by a wide range of experts, issuers and investors.
While delegates made it clear that more needs to be done to shape debt markets to support the region’s rapidly growing needs, they also identified a number of promising trends. They were united on this being a time of clear potential: to enhance emerging connections between markets; to build infrastructure that both supports rising populations and contributes to sustainability targets; and to develop innovations in funding and service delivery that meet the goals of communities, issuers and investors. Asia-Pacific’s dynamism, in other words, will continue to stand it in good stead.
- Soaring infrastructure demand: Regional forces are shaping the development of Australian and New Zealand infrastructure and contributing to the financial viability of this infrastructure going forward, further underlining the growing interdependency of Asia-Pacific economies.
- Sustainability no longer optional: This means future infrastructure has to be ‘built green’, taking into account the impact of climate change and the regulations that are likely to arise. This push is also coming from the investor side as more funds operate under sustainability mandates.
- Green bond solutions taking off: It's estimated that the total green bond issuance will nearly double to US$150 billion this year. Importantly, much of this growth will be rooted in Asia, presenting new opportunities for issuers and investors alike.
- Social bonds on the rise: Social bonds are an even more nascent asset class than green bonds, but have come to prominence in the last couple of years.
- The power of diversification: Diversification was another key regional theme raised -- in terms of issuers, investors and types of issuance alike.
- New targets in the hunt for yield: The growth in yield-hungry Asian investors is being matched by the emergence of more firms in Australia and New Zealand that may be primarily domestically focused, but are keen to tap into an international investor base.
- An era of opportunity: The end result will be regional debt markets that are in many ways more self-taught and self-sustaining, and that balance financial with environmental and social returns.