The conference, "Gearing up Regulatory Frameworks and Regional Cooperation – A New Era of Growth in Asian Bond Markets," was organized by ADB and the Government of Malaysia.
Emerging East Asia's bond markets have grown sharply over the last 10 years and were worth $4.2 trillion at the end of September 2009. However, the challenges of low turnover, a limited investor base and uneven issuer access means they are not playing their full economic role.
Inactive bond markets make it hard to gauge whether prices are reasonable or not, often leading borrowers to overpay for essential funds while a narrow range of investors leaves markets vulnerable to sudden inflows or outflows of capital. Emerging East Asia has witnessed impressive corporate bond market growth this year, but lower-rated issuers still have limited or no access to the debt markets.
ADB has been working hard to promote the development of the region's bond markets both as an issuer of groundbreaking local currency bonds and through the Asian Bond Markets Initiative (ABMI) to develop the region's markets, he said.
Under the ABMI – an initiative of the ASEAN+3 – ADB is helping to build regulatory frameworks and improve market infrastructure. Notably, it is working to create a Credit Guarantee and Investment Mechanism that will help regional companies raise longer-dated debt and lower costs.
"This will be particularly useful in helping finance large infrastructure projects with long gestation periods," said Mr. Lohani.
