The G3 bond issuance in Asia, outside of Japan and Australasia, hit a record high US$112.08 billion in the first quarter of 2021 as the market maintained the strong momentum witnessed in 2020. Riding on a bigger number of deals amid the historic low interest rate environment, the amount represented an increase of 19.1% compared with US$94.08 billion in the same period a year ago, and the volume was the largest first-quarter ever recorded since 2010.

The higher volume was largely driven by the brisk deal flow in January with issuance amounting to US$60.73 billion as issuers and borrowers took advantage of the conducive issuance window and strong investor appetite. The level of activity also demonstrated a recovery in March with the total offering reaching US$27.47 billion, up 72.5% from US$15.92 billion in the corresponding period of 2020.

Based on the figures supplied by Refinitiv, a London Stock Exchange Grouo business, several markets manifested higher issuance volume in the first three months of this year with China accounting for over US$42.97 billion, or a market share of 38.3%. This was up from US$38.97 billion in January-March 2020, underpinned by offerings from investment-grade Chinese credits. Deal volume out of Hong Kong also rose from US$18 billion to US$21.95 billion during the same period, while that from South Korea doubled from US$5.90 billion to US$11.97 billion.

The deal flow during the period included the US$5 billion offering by Alibaba Group Holdings, which priced a four-tranche deal of 10/20/30/40 years in February amid the regulatory scrutiny in China. The 20-year tranche amounting to US$1 billion represented Alibaba’s first sustainability bond offering, achieving a highly competitive pricing with a spread flat to its 10-year tranche. This was also the first sustainability bond out of Asia from the technology, media and telecommunications ( TMT ) sector.

Another major bond trade during the period was printed by the Republic of Indonesia, which kick-started the sovereign issuance from Asia this year on January 5 with  US dollar and euro bond issuances totalling US$4.3 billion equivalent.

High-yield G3 bond issuance, meanwhile, was down in the first quarter of this year with a total volume of US$24.35 billion, compared with US$26.33 billion in the same period of 2020. Several markets recorded lower issuance volume during the period. China, the biggest high-yield bond market in the region, registered a total amount of over US$11.12 billion, representing a decline of 17.6% from US$13.51 billion in January-March 2020. Issuance out of Hong Kong also fell from US$6.26 billion to US$5.79 billion, while that from Indonesia plummeted to US$1.24 billion from US$3.06 billion during the same period. Issuance out of India, on the other hand, managed to buck the downtrend and recorded a bigger volume of US$4.60 billion, against US$3.31 billion in the first quarter of 2020.

The lower volume comes even as high-yield bond issuance staged a strong recovery in March this year with a total offering of US$6.05 billion, compared with only US$1.49 billion in March 2020.