dealReporter, an actionable intelligence service providing price sensitive information and insight for the equity and fixed income markets, today released its 2010 Asian Convertibles Report, which indicated that convertible bond market in 2010 continued to be healthy and active after positive returns were seen in 2009.
According to the report, over 60 new convertible bonds (CB) were issued during 2010 in Asia Pacific, raised over $28 billion in total. 2009 was a year of good returns, which sets the market sentiment for 2010. Last year, new issuance amounted to $14.7 billion, representing a 75% y-o-y increase, and total redemption was $13.7 billion.
“2010 saw a positive net supply with the return of jumbo deals. This is encouraging for the market as issuers still saw the value of this fund raising tool even in a low interest rate environment,” said Sze Toh Yuin Munn, Head of Convertible Bonds Coverage Asia-Pacific at dealReporter.
The report shows that companies from China and Hong Kong were the most active issuers in the market last year, accounting for 37% and 24% of Asia-Pacific’s total value of new CB issuance within the year. With 23 CB issued within Hong Kong, the market accounted for 33% of the total 67 CB issued in Asia-Pacific in last year.
In 2011, CB issues from these markets are again expected to form a key support for the market for new issuances. Market sources quoted in the report said the Chinese government’s attempt to clamp down onshore liquidity and the rise of interest rates should further drive Chinese companies to increase exposure in the convertible bond market for offshore investors.
“All in all, the general market consensus is that with expectations of better equity markets in 2011, there is potential for further growth in the CB market this year as corporates grasp the opportunity to monetize higher share prices,” said Sze Toh. “The new CB issues so far this year have all come with different structures to appeal to the wider target audience and bode well for the year ahead. Nonetheless, while there is optimism in the market, investors have yet to shrug off the shadow of the credit crunch and remain cautious.”
Already in the one week blitz in January, four issuers from the region raised around $1.48 billion for refinancing and expansion needs. Responses to these deals have shown huge liquidity in the market to be put to use.
