The volume of bonds denominated in G3 currencies issued by Asia Pacific (ex-Japan) corporates fell 29.3% YoY in 1Q22 to USD 73.90bn-equivalent from USD 104.46bn-equivalent, dragged down by an 85.5% decline in the high-yield space amid the troubles in the Chinese property sector.
Volume of HY paper in the region fell to just USD 3.72bn-equivalent in 1Q22 from USD 25.65bn in 1Q21, making it the lowest quarterly tally since 1Q16 when USD 2.51bn was recorded. Investment-grade issuances were down by 11% YoY to USD 70.18bn in 1Q22 from USD 78.81bn in 1Q21 – those two were the first- and second-highest first-quarter volume in the past decade.
Chinese companies, while keeping their position as the biggest suppliers of G3 bonds in the region, recorded a 40.4% YoY fall in volumes to USD 31.69bn in 1Q22 from USD 53.21bn. Their share of the overall quarterly issuance from the region — which is usually more than 50% — reduced to 42.9% in 1Q22, versus 50.9% in 1Q21.
With the market shut to Chinese HY property developers, only two primary deals totaling USD 300m were priced by real-estate companies in 1Q22, a significant decline from the USD 12.57bn issued in 1Q21. The two deals were CIFI Holdings’ tap of an additional USD 150m off its originally USD 350m 4.45% due-2026 green notes and Greentown China Holdings’ USD 150m reopening of its existing USD 300m 4.7% due-2025s. Greentown China also issued a USD 400m 2.3% three-year green bond but that was backed by a standby letter of credit from China Zheshang Bank Hangzhou Branch, and hence the notes are rated BBB- by S&P.
Similarly, other active markets such as South Korea and India also ended 1Q22 with YoY declines of 38.3% and 34.3%, respectively, to USD 6.41bn and USD 6.33bn. Indian corporates printed a total of USD 2.025bn HY paper in 1Q22, accounting for 54.4% of the total HY bond volumes in the region. Greenko Wind Projects (Mauritius) printed USD 750m 5.5% 3NC2 green bonds towards the end of March after a three week pause of new HY deals in Asia.
There was also a shift towards higher-credit quality names in 1Q22: Corporates rated AA/Aa or above by either S&P, Moody’s or Fitch priced a combined USD 18.44bn, accounting for 28.2% of the total USD 65.27bn bonds that are rated. By comparison, USD 4.68bn, or 4.7%, of the 98.67bn total were issued by companies with such credit ratings in 1Q21.
For BBB/Baa and BB/Ba credits, volumes contracted 52.4% YoY and 81.6%, respectively, to USD 18bn and USD 3.12bn in 1Q22. Single-B issuances were just USD 440m, compared with USD 8.15bn recorded in 1Q21. The only two B-rated deals printed during the period were Macau gaming operator Studio City’s USD 350m 7% 5NC2 bonds and Indonesian coal-miner Golden Energy and Resources’ USD 90m tap of its originally USD 285m 8.5% due-2026 notes.
