ASIA CREDIT REPORT

Second Quarter 2015

PREPARED IN PARTNERSHIP WITH

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1. Table of Contents
1. Table of Contents...................................................................................................................................................... i
2.1. G3 ex DM Asia: Total Issuance ....................................................................................................................... 3
2.2. G3 ex DM Asia: Total Outstanding ................................................................................................................. 3
2.3. G3 ex DM Asia: HG Issuance .......................................................................................................................... 3
2.4. G3 ex DM Asia: HG Outstanding .................................................................................................................... 3
2.5. G3 ex DM Asia: HY Issuance ........................................................................................................................... 4
2.6. G3 ex DM Asia: HY Outstanding ..................................................................................................................... 4
2.7. G3 ex DM Asia: Total Issuance by Country .................................................................................................... 4
2.8. G3 ex DM Asia: Total Outstanding by Country .............................................................................................. 4
2.9. G3 ex DM Asia: Total Issuance by Sector ....................................................................................................... 4
2.10. G3 ex DM Asia: Total Outstanding by Sector ............................................................................................... 4
2.11. G3 ex DM Asia: HG Issuance by Rating ........................................................................................................ 5
2.12. G3 ex DM Asia: HG Outstanding by Rating .................................................................................................. 5
2.13. G3 ex DM Asia: HY Issuance by Rating ......................................................................................................... 5
2.14. G3 ex DM Asia: HY Outstanding by Rating ................................................................................................... 5
2.15. G3 ex DM Asia: Total Issuance by Tenor ...................................................................................................... 5
2.16. G3 ex DM Asia: Outstanding by Remaining Tenor ....................................................................................... 5
2.17. Asia ex DM: Total Leveraged Loan Issuance ................................................................................................ 6
2.18. Asia ex DM: Total Leveraged Loan Issuance by Use of Proceeds ................................................................ 6
3. LCY Asia ex Developed Market Asia (Japan, Australia and New Zealand) ............................................................... 7
3.1. LCY ex DM Asia: Total Issuance ...................................................................................................................... 7
3.2. LCY ex DM Asia: Total Outstanding ................................................................................................................ 7
3.3. LCY ex DM Asia: Issuance by Currency........................................................................................................... 7
3.4. LCY ex DM Asia: Issuance by Sector ............................................................................................................... 7
3.5. LCY ex DM Asia: Outstanding by Country ...................................................................................................... 7
4. All Asia ..................................................................................................................................................................... 8
4.1. G3 All: Total Issuance ..................................................................................................................................... 94.2. G3 All: Total Outstanding ............................................................................................................................... 94.3. G3 All: HG Issuance ........................................................................................................................................ 94.4. G3 All: HG Outstanding .................................................................................................................................. 94.5. G3 All: HY Issuance......................................................................................................................................... 94.6. G3 All: HY Outstanding................................................................................................................................... 9Page | i4.7. LCY All: Total Issuance.................................................................................................................................. 10
5. China – Domestic ................................................................................................................................................... 11
5.1. Domestic CNY All: Total Issuance ................................................................................................................. 125.2. Domestic CNY All: Total Outstanding ........................................................................................................... 125.3. Domestic CNY All: Issuance by Rating .......................................................................................................... 125.4. Domestic CNY All: Outstanding by Rating .................................................................................................... 125.5. Domestic CNY All: Issuance by Tenor........................................................................................................... 125.6. Domestic CNY All: Outstanding by Remaining Tenor................................................................................... 125.7. Domestic CNY All: Issuance by Sector .......................................................................................................... 13
5.8. Domestic CNY All: Outstanding by Sector .................................................................................................... 13
6. China – CNH ........................................................................................................................................................... 14
6.1. CNH All: Total CNH Issuance ........................................................................................................................ 14
6.2. CNH All: Total Outstanding .......................................................................................................................... 14
6.3. CNH All: Issuance by Rating ......................................................................................................................... 15
6.4. CNH All: Outstanding by Rating ................................................................................................................... 15
6.5. CNH All: Issuance by Tenor .......................................................................................................................... 15
6.6. CNH All: Outstanding by Remaining Tenor .................................................................................................. 15
6.7. CNH All: Issuance by Sector ......................................................................................................................... 15
6.8. CNH All: Outstanding by Sector ................................................................................................................... 15
7. Spreads, Credit & Total Return .............................................................................................................................. 16
7.1. Global HG Corporate Spreads ...................................................................................................................... 16
7.2. Global HY Corporate Spreads....................................................................................................................... 16
7.3. China Interbank AAA - BBB Corps Fixed Rate Curve .................................................................................... 177.4. CNH HG Yield Curve ..................................................................................................................................... 177.5. CNH HY Yield Curve ...................................................................................................................................... 17
7.6. CNH NR Yield Curve...................................................................................................................................... 177.7. Global Returns, Quarter-End ....................................................................................................................... 17
7.8. Global Returns, 2015 Year to Date .............................................................................................................. 17
7.9. Asia Upgrades / Downgrades ex DM Asia .................................................................................................... 18
7.10. Asia Upgrades / Downgrades, DM Asia ..................................................................................................... 18
7.11. Asian Upgrades & Downgrades, Standard & Poor's, First Quarter 2015 ................................................... 18
7.12. Asian Defaults, Standard & Poor's, Second Quarter 2015 ......................................................................... 18
8. Summary of the Methodologies Adopted for this Report ..................................................................................... 19
9. Disclaimer .............................................................................................................................................................. 24
10. Credit ................................................................................................................................................................... 24

Page | ii

2. G3 Asia ex Developed Market Asia (Japan, Australia and New
Zealand)Market Overview and Highlights of Asia (ex-Japan, Australia and New Zealand) debt issuance in Second
Quarter 2015
Total issuance in 2Q’15 came in at USD 63.3 billion (bn) as of June 30, up 28.1% quarter-over-quarter (qoq)from 1Q’15 (USD 49.5bn) but down 6.2% year-over-year (yoy), inclusive of high grade (HG), high yield (HY),and unrated deals. Year to date, issuance was USD 112.8 billion, comprised of USD 92.4bn HG issuance, USD
10.8bn HY issuance, and USD 9.5bn unrated issuance. Notably, Asian EM G3 issuance volumes have held up
at a time when EM issuance overall is down sharply in 1H’15 (EMEA and Latin America down 57% and 45%
respectively – Thomson Reuters), on a continuation of trends seen in 1Q’15. The continued absence of Brazil
and Russia, sustained USD strength and concerns around impending US rate increases have all underminedsentiment towards EM debt in general – Asia is the only part of the EM debt space that remains relatively
well underpinned.
Key highlights of the quarter were as follows:
1) HG issuance (of USD 52.1bn) easily outpaced HY issuance, which at USD 4.7bn fell to represent just
7.5% by dollar amount of total Asia ex-Japan, Australia and New Zealand debt issuance, down from
12.4% in the first quarter of 2015. Given the dominance of Chinese property sector names in the
Asian HY space, a combination of the slowing Chinese economy coupled with a handful of wellpublicized defaults by mainland-based issuers dimmed investor appetite for HY bonds. Even so,
Chinese issuers continue to dominate overall Asian G3 issuance, on the back of more diverse rangeof HG issuance in areas such as infrastructure (China Three Gorges Corp) and asset management(China Cinda Asset Management). Additionally, the use of offshore bond markets for acquisition
financing by Chinese issuers will help complement the domestic loan markets (where the rules haverecently been liberalized by the China Banking Regulatory Commission (CBRC)) as a source offinancing.
2) Other key trends worth highlighting are as follows:•

EUR-denominated issuance out of China has surged 600% on a yoy basis (IFR), albeit off a
low base. Recent issuers included Beijing Overseas Investment and China Overseas Land &Investment; expectations for continued EUR weakness, coupled with the low absolute levelof EUR interest rates, besides attractive swap levels, have served as catalysts.

•

The Asian private banking bid has helped to support Asian G3 debt issuance, even as
issuance of EM paper from elsewhere has faltered – this has also ensured that it is possiblefor issuers to get deals done in the Reg S format alone (without the need for support from
US investors in the Rule 144A format).

•Financial Institution issuance has held up well in 1H’15 – the still-massive requirement forBasel III compliant capital (particularly on the part of Indian and Chinese banks) will ensurethat AT1 and T2 capital issuance remains robust – and while a portion of such issuance will
be absorbed in the respective countries’ domestic markets, the lack of onshore liquidity will
drive a large proportion of bank capital issuance offshore.

Page | 1

3) Looking ahead, other emerging trends worth noting are a) the possibility that G3 issuance fromsome countries, Indonesia and Malaysia in particular, will drop sharply on weakness in their local
currencies (IDR and MYR); b) emerging sectors which could see issuance include “Green Bonds”(Xinjiang Goldwind is set to issue China’s first green bond) and “Project Bonds” to help finance Asia’s
growing infrastructure needs; c) a combination of factors such as i) USD strength ii) attractive swap
levels and iii) the opening up of local markets such as the “Formosa Bond” market in Taiwan should
help underpin LCY-denominated bond issuance in 2H’15.
The sharp backup in US Treasury yields adversely impacted HG total returns. On a quarterly basis, Asian HYdebt outperformed Asian HG paper in a reversal of events in prior quarters, with HY paper reporting gains in
2Q’15 (2.78% total return), while HG lost 1.08% during the quarter.
State of the Asian leveraged loan market
Asian leveraged loan debt, excluding developed market Asia, reached USD 56.3bn in 2Q’15, a 2.4% decline
qoq (USD 57.6bn) and a 14.4% decline yoy (USD 65.7bn). Leading sectors in 2Q’15 issuance were from utility& energy (USD 9.0bn), holding companies (USD 5.3bn), and computers & electronics (USD 5.2bn). Sponsoredloan deals fell slightly by percentage, representing only 0.6% by dollar amount in the second quarter. Year todate, leveraged loan issuance was USD 113.9bn.
Key trends in Asia (ex-Japan, Australia and New Zealand) G3 & LCY bond issuance
For the second quarter 2015, total G3 issuance stood at USD 63.3bn, with HG transactions accounting for
USD 52.1bn, HY issues accounting for USD 4.7bn, and unrated issues accounting for 6.5bn. China remains thelargest issuing country in the second quarter, accounting for a total of USD 40.8bn, or nearly 65%, of G3
issuance in 2Q’15, with USD 35.0bn and USD 2.5bn in HG and HY deals, respectively, priced from Chinaalone. South Korea continues to remain second in issuance volume with USD 5.4bn, followed by Indonesia
with USD 4.4bn in issuance.
During 2Q’15, three sectors between them accounted for the largest share of G3 issuance by sector: finance(USD 18.6bn), oil & gas (USD 12.1bn, and sovereigns (USD 4.5bn).
In terms of ratings, within the HG space, AA- transactions accounted for the largest share of deals priced
during the quarter, with USD 15.9bn in total issuance, followed by A+ transactions totaling USD 8.3bn and Aissuance with USD 6.4bn. As for HY issuance, the BB- category dominated with USD 1.9bn of issuance,
followed by B+ and B-rated transactions (USD 1.1bn).
By tenor, Asia ex-Japan, Australia and NZ G3 deals with tenors of 5 years or less accounted for the bulk ofissuance in 2Q’15, with a total of USD 30.6bn in short tenor issues being priced during the quarter. Of these,
USD 24.3bn and USD 3.0bn were HG and HY deals, respectively, and the balance unrated.
Overall G3 debt outstanding in the region stood at USD 754.1bn, a growth of 6.9% qoq. High grade debt
accounted for the bulk of total outstanding debt at USD 487.8bn (a 3.9% growth qoq), followed by HY debt
at USD 156.0bn (a growth of 11.6% qoq) and NR debt at USD 110.3bn (a growth of 14.3% qoq). China (withUSD 241.4bn), South Korea (with USD 124.8bn) and Hong Kong (with USD 109.1bn) remain the three
countries with the largest shares of G3 debt outstanding. In terms of ratings, within the HG space, deals
rated A+ (USD 107.2bn) accounted for the largest share of debt outstanding, while NR deals (USD 110.3bn)
and BB+ transactions (USD 64.4bn) dominated the deals outstanding in the HY space. By sector, financials
with a total of USD 199.8bn accounted for a little over a quarter of outstanding G3 paper, followed bysovereigns (USD 173.6bn). Finally, deals with remaining tenors of 5 years or less (USD 369.4bn) accounted
for the bulk of total Asia (ex-Japan, Australia and NZ) debt outstanding.

Page | 2

Finally, turning to the LCY debt markets, USD 184.3bn in total LCY-denominated debt was issued in Asia (exJapan, Australia & NZ) in 2Q’15, an increase of 60.8% qoq (USD 114.6bn) but a decline of 16.2% yoy (USD
220.0bn). Year to date, LCY issuance has reached USD 112.8bn and is on track to slightly exceed 2014
volumes. Total LCY debt outstanding at the end of 2Q’15 in Asia (ex-Japan, Australia and NZ) stood at USD
10.93tn, growing by 6.1% qoq, although HG and HY debt outstanding declined 11.6% and 9.8% respectively,
while non-rated debt grew 9.1%. China continues to account for the bulk of total outstanding LCY debt at
USD 6.21tn, followed by India (USD 1.53tn) and South Korea (USD 1.40tn).
2.1. G3 ex DM Asia: Total Issuance2.2. G3 ex DM Asia: Total Outstanding

G3 ex DM Asia: Total Issuance2007 - 2015:Q2
250,000

G3 ex DM Asia: Total Outstanding
2013:Q3 - 2015:Q2$ millions

800

NR
HY

200,000

HG
150,000700$ billions

NR
HY

600

HG

500
400

100,000
300

50,000

200
100

0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2014

2015

2015

0
Q3

Q2

Q4

Q1

Q2

Q3

Q4

2014

2013

2.3. G3 ex DM Asia: HG IssuanceQ2

2.4. G3 ex DM Asia: HG Outstanding

G3 ex DM Asia: HG Issuance2007 - 2015:Q2
180,000

Q1

2015
Source: Bloomberg

Source: Dealogic

G3 ex DM Asia: HG Outstanding
2013:Q3 - 2015:Q2$ millions

600$ billions

160,000500

140,000
120,000

400

100,000
300

80,00060,000200

40,000100

20,000
0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2015

2014

2015
Q2

0
Q4

Q3
2013

Source: Dealogic

Q1

Q2

Q3
2014

Q4

Q1

Q2
2015

Source: Bloomberg

Page | 3

2.5. G3 ex DM Asia: HY Issuance2.6. G3 ex DM Asia: HY Outstanding

G3 ex DM Asia: HY Issuance2007 - 2015:Q2
50,000G3 ex DM Asia: HY Outstanding
2013:Q3 - 2015:Q2$ millions

400

45,00040,00035,000

Corp HY
and NR

350

Sovereign
HY and NR

300

30,000$ billions

NR
HY

250

25,000200

20,000150

15,00010,000

100

5,000

50

0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2014

2015

2015

0
Q3

Q2

Q4

Q1

Q2

2013

Q3

Q4

Source: Bloomberg

2.8. G3 ex DM Asia: Total Outstanding by Country

G3 ex DM Asia: Total Issuance by Country
2015:Q2G3 ex DM Asia: Total Outstanding by Country
2015:Q2$ millions

NR
30,000

HG
HY

25,00020,00015,00010,000$5,350.05,000
0$4,395.0$2,755.0 $2,371.6 $2,350.0 $2,184.5

ChinaSouth Korea

Indonesia

India

Hong Kong

Singapore

Malaysia$1,630.0
Taiwan$650.0$500.0$300.0

Sri Lanka

Mongolia

Philippines

CHINA
SOUTH KOREA
HONG KONG
INDONESIAINDIA
SINGAPORE
MALAYSIAPHILIPPINESTHAILANDSRI LANKATAIWANPAKISTANMONGOLIAVIETNAMMACAU
BANGLADESH
FIJI
PITCAIRN IS.

$ billions

35,000

Q2
2015

Source: Dealogic

2.7. G3 ex DM Asia: Total Issuance by Country

Q1

2014

0

50

100

150

200

Source: Dealogic

2.9. G3 ex DM Asia: Total Issuance by Sector

250

300

Source: Bloomberg

2.10. G3 ex DM Asia: Total Outstanding by Sector

G3 ex DM Asia: Total Issuance by Sector
2015:Q2G3 ex DM Asia: Outstanding by Sector
2015:Q2

Finance
Oil & Gas
Government
Real Estate/Property
Utility & Energy
Construction/Building
Telecommunications
Transportation
Chemicals
Computers & Electronics
Insurance
Machinery
RetailFood & Beverage
Aerospace
Mining
Metal & Steel

HY

Financials

HG

Government

NR

EnergyHY
HG

Real EstateNR

Consumer Discretionary
Utilities
Industrials
Materials

Technology$ billions$ millions

Communications

Consumer Staples
Health Care

0

5,000

10,00015,00020,00025,000Source: Dealogic

0

50

100

150

200

250

Source: Bloomberg

Page | 4

2.11. G3 ex DM Asia: HG Issuance by Rating

2.12. G3 ex DM Asia: HG Outstanding by RatingG3 ex DM Asia: HG Issuance by Rating
2015:Q2G3 ex DM Asia: HG Outstanding by Ratings
2015:Q2

BBB+

A
A+

BBB-

ABBB
AA
AAA

AA+
AA-

A+

AAA

AA

BBB
$ billions$ millions

AA-

BBB+
BBB-

0

2,000

6,000

4,000

8,000

10,00012,00014,00016,00018,000

0

20

40

60

80

100

2.13. G3 ex DM Asia: HY Issuance by Rating120

Source: Bloomberg

Source: Dealogic

2.14. G3 ex DM Asia: HY Outstanding by RatingG3 ex DM Asia: HY Issuance by Rating
2015:Q2G3 ex DM Asia: HY Outstanding by Rating
2015:Q2
B

BB-

Sovereign

B+

Corp

B-

Corp
Sovereign

BB
BB

BB+
BBCC

B+

CC+
CCC
CCC+

Not
rated

CCC$ billions$ millions

B

DDD
DDD+
NR

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

20

40

60

80

100

2.15. G3 ex DM Asia: Total Issuance by Tenor

120

Source: Bloomberg

Source: Dealogic

2.16. G3 ex DM Asia: Outstanding by Remaining
Tenor

G3 ex DM Asia: Total Issuance by Tenor
2015:Q2G3 ex DM Asia: Outstanding by Remaining Tenor
2015:Q2

10+ Years

HY

10 +

HG
NR

7 - 10 Years
8 - 10 Years
5 - 7 Years

5 - 7 Years

HG
Other

NR
0

5,000

10,00015,00020,00025,00030,00035,000Source: Dealogic$ billions

HY$ millions

13 Months - 5 Years

<5

0

50

100

150

200

250

300

350

400

Source: Bloomberg

Page | 5

2.17. Asia ex DM: Total Leveraged Loan Issuance
Asia ex DM: Leveraged Loan Issuance2007 - 2015:Q2
300,000

2.18. Asia ex DM: Total Leveraged Loan Issuance by
Use of Proceeds
Asia ex DM: Leveraged Loan Issuance by Use of Proceeds
2015:Q2$ millions

Capital Expenditures
250,000

Repay Debt
General Corporate Purposes

200,000

Refinancing
Project Financing
Acquisitions

150,000

Future Acquisitions
Working Capital

100,000

LBO/MBO
Private Placement
50,000Millions

Trade Financing
Property

0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2015

2014

2015
Q2

Source: Dealogic

Shipping
0

2,000

4,000

6,000

8,000 10,000 12,000 14,000 16,000 18,000 20,000
Source: Dealogic

Page | 6

3. LCY Asia ex Developed Market Asia (Japan, Australia and New
Zealand)3.1. LCY ex DM Asia: Total Issuance3.2. LCY ex DM Asia: Total Outstanding

LCY ex DM Asia: Total Issuance2007 - 2015:Q2
1,400,000

LCY ex DM Asia: Total Outstanding
2013:Q3 - 2015:Q2$ millions

12,0001,200,000
10,0001,000,000$ billions

NR
HY
HG

8,000
800,000$9,606.2$7,851.5$8,801.9$7,454.2$8,533.1$7,244.7$8,178.7$7,296.9$7.1$1,384.9$29.0$1,526.6$28.9$1,525.7$28.8$1,516.9$29.1$1,488.1$35.1$1,466.4$35.0$1,460.4$31.6$1,290.3

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

6,000

600,000
400,000

4,000

200,000
2,000
0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2014

2015

2015
Q2

0
2013

2014

2015
Source: Bloomberg

Source: Dealogic

3.3. LCY ex DM Asia: Issuance by Currency

3.4. LCY ex DM Asia: Issuance by Sector

LCY ex DM Asia: Issuance by Currency
2015:Q2LCY ex DM Asia: Issuance by Sector
2015:Q2$137,936.2

KRW$26,154.6

INR$5,127.6

MYR$3,467.8

CNH$3,384.7

THB$2,840.2

SGD$2,601.4$1,817.5

PHP$491.2

HKD$334.1

IDR$133.60$ millions

TWD

20,00040,00060,00080,000100,000

120,000

140,000

160,000

Source: Dealogic

Finance
Construction/Building
Transportation
Real Estate/Property
Utility & Energy
Government
MiningHolding Companies
Metal & SteelOil & Gas
Chemicals
Food & Beverage
Healthcare
RetailComputers & Electronics
Telecommunications
Professional Services
Auto/Truck
Agribusiness
Dining & Lodging
Consumer Products
Publishing
TextileDefenseMachinery
Forestry & Paper
Leisure & Recreation$14,481.0$14,427.6$11,670.7$8,650.8$8,220.8$7,594.0$5,978.5$5,536.2$2,481.9$2,410.0$2,377.8$2,326.9$2,222.6$2,147.8$1,844.7$1,829.5$822.2$640.6$564.7$420.1$389.7$328.1$325.7$191.2$165.00

10,00020,000$59,275.6$26,965.1$ millions

CNY

30,00040,00050,00060,00070,000Source: Dealogic

3.5. LCY ex DM Asia: Outstanding by Country
LCY ex DM Asia: Outstanding by Country
2015:Q2$6,209.4

CHINA
INDIA
SOUTH KOREA
MALAYSIATHAILANDTAIWANSINGAPORE
HONG KONG
INDONESIAPAKISTANPHILIPPINESVIETNAM
SRI LANKABANGLADESHPAPUA N.GUINEA
LAOS
FIJI
BRUNEIMONGOLIA
MACAU
AFGHANISTANSOLOMON ISLAND$1,525.5$1,397.70

1,000$ millions$329.2$300.0$277.6$231.1$181.1$174.8$159.8$107.1
$44.9
$32.1
$19.6
$2.8
$0.9
$0.5
$0.4
$0.3
$0.2
$0.1
$0.1
2,000

3,000

4,000

5,000

6,000

7,000

Source: Bloomberg

Page | 7

4. All Asia
Total Issuance & Outstanding – G3 and LCY for Asia (including Japan, Australia and New Zealand)
Total G3 issuance in Asia (including Japan, Australia and New Zealand) stood at USD 122.9bn in the second
quarter of 2015, a decline of 6.4% qoq and 17.8% yoy. Total HG G3 issuance in Asia (including Japan,
Australia and New Zealand) was USD 82.5bn in 2Q’15, a decline of 12.5% qoq and 22.5% yoy. HY issuancewas USD 4.9bn in 2Q’15, a decline of 35.4% qoq and 58.9% yoy, On the other hand, unrated G3 issuance inAsia was USD 35.4bn in 2Q’15, a growth of 21.1% qoq and 13.8% yoy. Year to date, G3 issuance reached USD
254.1bn, on track to similar issuance volumes of 2014 (USD 254.1bn), comprised of USD 176.9bn HG
issuance, USD 12.0 HY issuance, and USD 31.1bn unrated issuance. Outstanding G3 debt, including
developed market Asia, stood at USD 11.93tn at the end of second quarter 2015, a decline of 0.4% qoq, withdeclines in unrated debt (USD 3.08tn, 1.5% decline) and HG debt (USD 8.64tn, a 0.7% decline) but growth in
HY debt (USD 206.05bn, 34.4% growth).
Finally, turning to LCY debt issuance, total HG issuance, including Japan, Australia, and New Zealand, stood at
USD 278.1bn in the second quarter of 2015, while HY issuance and unrated issuance combined was USD
210.5bn, for a total of USD 488.6bn in issuance These figures were well above comparable figures of USD
431.8bn on a qoq basis but well below USD 629.3bn on a yoy basis. Year to date, LCY issuance was USD
920.4 bn, on track to fall just shy of 2014 totals (USD 2.1tn).
In the current environment, where EM has generally fallen out of favor (driven by idiosyncratic risks incountries such as Brazil, Russia and Turkey) and moreover, with these countries’ currencies reacting
adversely to USD strength, both the Chinese renminbi (RMB) and to a lesser extent, the Indian rupee (INR)
have held up well. The RMB’s performance is especially noteworthy, given growing evidence of a slowdown
in China.
On balance we do expect that there will be bids for the better-rated Chinese credits, which should continue
to act as a catalyst for HG G3 issuance out of China (the specific sectors for such HG issuance have been
covered in Section 2). As for RMB issuance, investors will tend to favor the domestic RMB issues as opposed
to offshore CNH as an increasing number of investors are granted access to the much deeper onshore
markets through China’s gradual liberalization. Moreover, yields on comparable credits are higher onshore
relative to the offshore debt markets.
Elsewhere, cross-border regional issuance in LCY (such as Thai issuance in MYR) is an emerging trend that
could get a boost as conditions in the swap markets (where savings of 25-50bps relative to straight USD
bond issuance) make it favorable to do so. Also, the streamlining of the bond issuance framework within the
ASEAN + 3 region could also help support intra-regional bond issuance within ASEAN.

Page | 8

4.1. G3 All: Total Issuance4.2. G3 All: Total Outstanding

G3 All: Issuance2007 - 2015:Q2
600,000

G3 All: Outstanding in Asia
2013:Q3 - 2015:Q2
12,200$ millions

NR
500,000$ billions$12,089.72

12,100HG
HY$11,981.55

12,000$11,944.82$11,938.97$11,929.61

400,000
11,900300,000

11,80011,700200,000$11,755.56$11,665.96 $11,648.00

11,600100,000

11,500
0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2014

2015

2015

11,400
Q3

Q2

Q4

Q1

Q2

2013

Q3

Q4

2014

4.4. G3 All: HG Outstanding

G3 All: HG Issuance2007 - 2015:Q2
400,000

Q2

2015
Source: Bloomberg

Source: Dealogic

4.3. G3 All: HG Issuance

Q1

G3 All: HG Outstanding
2013:Q3 - 2015:Q2$ millions$ billions

8,800
8,700

350,000

8,600

300,000

8,500
250,000
8,400
200,000

8,300

150,000

8,200
8,100

100,000

8,000

50,000

7,900
0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2014

2015

2015

7,800
Q3

Q2

Q4

Q1

Q2

Q3

Q4

Source: Bloomberg

4.6. G3 All: HY Outstanding

G3 All: HY Issuance2007 - 2015:Q2
180,000

Q2
2015

Source: Dealogic

4.5. G3 All: HY Issuance

Q1

2014

2013

G3 All: HY Outstanding
2013:Q3 - 2015:Q2$ millions
4,000$ billions

Corp HY & NR

160,000

3,500
140,000

Sovereign HY
& NR

3,000

120,000
100,000

2,500

80,0002,000

60,0001,500

40,000

NR

1,000

HY

20,000
500
0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2015

2014

2015
Q2

Source: Dealogic

0
Q3

Q4
2013

Q1

Q2

Q3
2014

Q4

Q1

Q2

2015
Source: Bloomberg

Page | 9

4.7. LCY All: Total Issuance
LCY All: Total Issuance in Asia
2007 - 2015:Q2
3,500,000$ millions

HY
3,000,000

HG
NR

2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
YTD
2007

2008

2009

2010

2011

2012

2013

2014

2015

2014

2015
Q2

Source: Dealogic

Page | 10

5. China – Domestic
Total Issuance & Outstanding – Domestic CNY issuanceTotal domestic CNY issuance stood at USD 138.0bn in the second quarter of 2015, recovering from the tepid
first quarter in volume (USD 71.1bn) but still declining of 13.7% yoy (USD 164.9bn); year to date,domestic
CNY issuance is USD 209.0 bn, on track to be significantly below 2014 volumes (USD 498.7bn). By tenor,
52.7% of second quarter issuance (USD 72.7bn) would mature in five years or less, followed by the 7 – 10year bucket (USD 26.7bn). By sector, finance led issuance totals (USD 33.7bn), followed by construction (USD
23.5bn).
Outstanding domestic CNY debt stood at USD 6.01tn at the end of second quarter 2015, with sovereigns
leading totals (USD 3.44tn), followed by financials (USD 1.21tn) and industrials (USD 548.20bn). Looking
ahead, domestic CNY bond issuance should continue to hold up, on a confluence of several favorable
underlying trends:a) With the Chinese authorities committed to further liberalization and reform, the domestic bondmarkets have recently been opened to a larger group of investors – foreign central banks, sovereign
wealth funds and international financial institutions have been granted access (without priorpremission) to the domestic interbank bond, swap and repo markets. These steps have been taken
ahead of the possible inclusion of the renminbi in the IMF’s SDR basket, which could act as a catalyst
for the further opening up of the domestic bond markets.
b) As China’s domestic bond market has become progressively more accessible, issuance in theoffshore CNH bond market has declined, as investors find it increasingly easier to invest onshore.
c) A combination of state-owned Enterprises, quasi-governmental and municipal bodies, banks andcorporates have vast funding requirements, which had been met via the stock market until recently.
Given the recent volatility in Chinese equities, issuers and investors might prefer the relative stabilityof the domestic debt markets.
d) Chinese authorities are also moving to restrict reliance on the “shadow banking” system by a whole
range of borrowers. This should also be supportive of domestic bond issuance.
e) Finally, lingering concerns around sustained USD strength could prompt many local issuers to turn to
the LCY-denominated domestic bond market, rather than the USD-denominated offshore markets(similar to trends elsewhere in the region; while it is true that the Chinese currency has held up
relatively better, it is not known whether relative renminbi strength will continue unabated).

Page | 11

5.1. Domestic CNY All: Total Issuance

5.2. Domestic CNY All: Total Outstanding

Domestic CNY All: Total Domestic Issuance2008 - 2015:Q2
1,200,000

Domestic CNY All: Total Outstanding
2014:Q1 - 2015:Q2$ millions

7,000,000

1,000,000

6,000,000

800,000

5,000,000$ millions

4,000,000

600,000

3,000,000

400,000

2,000,000
200,000
1,000,000
0
YTD
2008

2009

2010

2011

2012

2013

2014

2014

2015

2015

0

Q2

2014Q1

2014Q2

2014Q3

2014Q4

2015Q15.3. Domestic CNY All: Issuance by Rating

2015Q2
Source: Bloomberg

Source: Dealogic

5.4. Domestic CNY All: Outstanding by Rating
Domestic CNY All: Outstanding By Rating
2015:Q2

Domestic CNY All: Issuance by Rating2008 - 2015:Q2
100%

Not rated
BB
A
AAA

90%
80%
70%

B
BBB
AA

A+

$213,242.4465

60%
50%
40%
30%
NA/NR

$5,797,447.4018$ millions

20%
10%
0%
YTD
2008

2009

2010

2011

2012

2013

2014

2014

2015

2015
Q2

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

Source: Dealogic

5.5. Domestic CNY All: Issuance by Tenor

6,000,000

7,000,000

Source: Bloomberg

5.6. Domestic CNY All: Outstanding by Remaining
Tenor

Domestic CNY All: Total Issuance by Tenor
2008 - 2015:Q2

Domestic CNY All: Outstanding By Remaining Tenor
2015:Q1100%

4,500,000$ millions

90%
4,000,000
80%

3,000,000

60%
50%

Other

2,500,000

40%

10+ Years

2,000,000

30%

7 - 10 Years

20%

5 - 7 Years

10%$3,681,767.5

3,500,000

70%

1,500,000$1,290,409.1

1,000,000

13 Months - 5 Years$518,585.6$519,927.7

500,000

0%
YTD
2008

2009

2010

2011

2012

2013

2014

2015

2014

2015
Q2

Source: Dealogic0< 5 Years

5 - 7 Years

7+ - 10 Years

10+ Years
Source: Bloomberg

Page | 12

5.7. Domestic CNY All: Issuance by Sector

5.8. Domestic CNY All: Outstanding by Sector
Domestic CNY All: Total Outstanding By Sector
2015:Q2$13,478.65$11,928.53$8,932.76$8,566.79$8,220.81$6,904.63$4,624.09$4,580.12$1,938.61$1,899.36$1,697.04$1,438.41$1,326.44$1,168.94$916.83$564.70$556.90$466.80$393.21$343.95$328.07$270.03$163.65$65.45$49.180

5,000

10,00015,00020,000$23,505.94$33,663.48

Government
Financials$1,212,393.8

Industrials$548,198.3

Energy$222,491.8

Utilities$213,601.6

Materials$197,421.3

Consumer Discretionary$90,930.6

Consumer Staples$29,601.9

Communications$16,261.9

Technology$16,005.9

Health Care

$15,794.3

Other$1,238.6
025,00030,00035,000 40,000 45,000
Source: Dealogic$ millions

Finance
Construction/Building
Transportation
Real Estate/Property
Utility & Energy
Government
MiningHolding Companies
Metal & SteelOil & Gas
Healthcare
Chemicals
RetailTelecommunications
Food & Beverage
Professional Services
Auto/Truck
Consumer Products
Computers & Electronics
Agribusiness
Publishing
TextileDefenseMachinery
Forestry & Paper
Leisure & Recreation
Dining & Lodging$ millions

Domestic CNY All: Total Issuance by Sector
2015:Q2

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Source: Bloomberg

Page | 13

6. China – CNH
Key trends in offshore renminbi (CNH) and the dim sum bond markets
The pace of issuance continued to slow down on a yoy basis in the second quarter. For the second quarter of2015, an equivalent of USD 8.0bn in CNH bonds were issued, an increase of 3.2% qoq but a decline of 49.6% yoy.
Year to date, issuance has reached USD 15.8bn, on track to fall well short of 2014 totals (USD 42.1bn). As alluded
to above, increased access to the onshore market for international investors, together with better yields available
in the domestic CNY market, have combined to take a toll on CNH issuance. The maturing of the offshore RMB
market in Hong Kong, coupled with the increased attractiveness of the Formosa bond market in Taiwan, isanother factor. Finally, the relatively stagnant CNH deposit base in Hong Kong, which was marginally lower at CNH
972.4 bn (USD 156.6bn) at the end of May, relative to the CNH 973.0 bn (USD 156.3bn) figure at the end of
February (the Chinese currency has weakened over the last few months) has also contributed to the waning ofinterest on the part of issuers looking to tap the HK dim sum bond market.
In terms of tenor, nearly all of second quarter 2015 issuance (USD 7.8bn) was accounted for by transactions withtenors of 5-year years or less. HG deals rated A totaling USD 1.5bn had the highest share among rated deals(18.4%). In 2Q’15, finance sector transactions totaling USD 6.2bn accounted for the largest volume of deals bysector (77.3%), followed by computers & electronics, totaling USD 653.6mn (representing 8.2% of issuance).
The total of dim sum bonds outstanding stands at USD
94.77bn, an increase of 2.1% qoq. In terms of RMB
internationalization, all eyes are on the IMF, as market
participants anticipate the possible inclusion of the RMB in
the SDR basket – the inclusion of the Chinese currency will
be seen as a major signal heralding its arrival on theinternational stage. Finally, in China, the launch of the China
International Payments System (CIPS) is expected later thisSources: HKMA (Hong Kong), MAS (Singpore), Central Bank ofRepublic of China (Taiwan), Reuters (Korea), RMB Budapest
year, following the completion of successful testing by a(Luxembourg) Standard Chartered (UK, France); Exchange Rate:group of 20 international and local banks. This system would
CNH 6.21 = USD 1.0
enable banks and corporations carrying out business in China
to settle transactions faster and more efficiently, than is currently the case.
CNH Deposit Base by Location Amt (USD bn)
Hong Kong
156.6
Singapore
41.4
Taiwan54.2
Korea, Republic of
19.8
Luxembourg
10.8
United Kingdom
1.8France4.0

As of
May-15Mar-15May-15
Apr-15
Dec-14
Dec-14
Dec-146.1. CNH All: Total CNH Issuance6.2. CNH All: Total Outstanding
CNH All: Total Outstanding
2013:Q3 - 2015:Q2

CNH All: Total CNH Issuance2008 - 2015:Q2
60,000120,000$ millions

50,000100,000

40,00080,00030,000$ millions

60,00020,00040,00010,00020,000
0
YTD
2008

2009

2010

2011

2012

2013

2014

2015

2014

2015
Q2

Source: Dealogic0
2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1
Source: Bloomberg

Page | 14

6.3. CNH All: Issuance by Rating

6.4. CNH All: Outstanding by Rating
CNH All: Outstanding By Rating
2015:Q2

CNH All: Issuance by Rating2008 - 2014:Q2
NA/NR

Not rated
BB
A
AAA

90%
80%
70%

B
BBB
AA

60%
50%
40%
30%

$74,969.3

BBB+$1,231.5

BBB-$776.5BBB$790.9BB-$857.0BB$2,262.8

B+$1,958.0

B-$407.6

B$520.8$1,104.1

AA-

20%

A+

10%

$5,588.8

A-$1,362.4

0%
YTD
2008

2009

2010

2011

2012

2013

2014

2014

2015

A

2015
Q2

$ millions

100%$2,940.2
010,00020,00030,00040,00050,00060,00070,00080,000Source: Bloomberg

Source: Dealogic

6.5. CNH All: Issuance by Tenor

6.6. CNH All: Outstanding by Remaining Tenor
CNH All: Outstanding By Remaining Tenor
2015:Q2

CNH All: Total Issuance by Tenor
2008 - 2015:Q2
100%

50,00090%

45,00080%

40,00070%

35,000$ millions$45,053.4

60%

30,000

50%

Other

40%

10+ Years30%

7 - 10 Years

20%

5 - 7 Years

15,00013 Months - 5 Years

10,00010%$41,345.9

25,00020,000

5,000

0%
YTD
2008

2009

2010

2011

2012

2013

2014

2014

2015

2015

$1,991.7$2,855.8

5 - Y Years

7 - 10 Years$3,523.2

0

Q2

Short Term

13 Months - 5
Years

10+ Years
Source: Bloomberg

Source: Dealogic

6.7. CNH All: Issuance by Sector

6.8. CNH All: Outstanding by Sector
CNH All: Total Outstanding By Sector
2015:Q2

CNH All: Total Issuance by Sector
2015:Q2

Financials
Finance$6,198.4
Government
Real Estate$653.6$8,560.8

Utilities
Real Estate/Property$507.2$184.1

Auto/Truck$163.9Government$163.6

Transportation$147.20

2,000Materials$2,547.7

Consumer Discretionary$2,486.7

Industrials$2,328.5

Technology$1,950.0

Communications$ millions

Food & Beverage$2,609.5

4,000

6,000

8,000

10,00012,00014,000Source: Dealogic$1,514.6

Energy$ millions

Computers & Electronics$50,378.8$21,617.9$592.3

Consumer Staples$183.30

10,00020,00030,00040,00050,00060,000Source: Bloomberg

Page | 15

7. Spreads, Credit & Total Return
Relative Value and returns (Asia ex-Japan, Australia & New Zealand G3)
In a trend consistent with previous quarters, Asian bonds continue to trade wider than their US andEuropean counterparts. At the end of 2Q’15, Asian HG bonds on a composite basis were quoted at an
average spread of 163 basis points (bps), while US and European HG bond issues were quoted at average
spreads of 148 bps and 120 bps respectively. Likewise, in the HY space, Asian HY corporates were quoted at
a composite spread of 607 bps, but US and European HY bonds were tighter at 500 bps and 440 bps
respectively.
In terms of total return in the second quarter, crude oil led returns, followed by UK and Japanese stocks,
while corporate debt generally underperformed with the exception of Asian HY. Asian HG lost 1.08% in thesecond quarter, while HY indices gained 2.78%. In our view, this will most likely turn out to have been a oneoff occurrence, as US Treasury weakness during the quarter (which contributed to relative weakness in HG
paper) has already begun to reverse as 3Q’15 gets under way. Moreover, tentative signs of risk aversion
have begun to emerge, as a whole host of asset classes – including HY bonds – have recorded steep falls inrecent weeks.
The catalysts for this are manifold – weakness in the shale sector in the US following the steep plunge in oil
prices (and commodity prices in general, on rising fears globally of a deflationary outcome), which has
accounted for the bulk of HY issuance in recent years, has translated into HY bond spread widening. Also,
while the concerns around Greece have been resolved temporarily, long-term fears around the sustainabilityof the Greek bailout have contributed to a more defensive mindset among market participants. Recent
Chinese Purchasing Manager Index (PMI) data have also come in weak and a whole range of EM currencies(including some in Asia, although not the INR and CNY – see above) have weakened sharply. Additionally, thebase case still remains for a rate hike on the part of the US Federal Reserve later this year, possibly in 4Q’15
at the latest, even if continuing market weakness prompts the Fed to refrain from acting at the next two
meetings. All these factors, coupled with the relatively tight levels that fixed income assets continue to tradeat despite recent widening, suggest that investors will favor more defensive, HG names, at the expense of
the riskier HY issues for the rest of 2015.
7.1. Global HG Corporate Spreads

7.2. Global HY Corporate Spreads

Global HG Corporate Spreads
Jul. 2007 - Jun. 2015
800

Global HY Corporate Spreads
Jul. 2007 - Jun. 2015
2,500

Basis Points

Basis Points

US

US

700

Asia
600

Asia

2,000

EuropeEurope

500

1,500

400
1,000

300
200

500
100
0
Jul-07

Jul-08

Jul-09Jul-10Jul-11

Jul-12

Jul-13

Jul-14

Source: BAML0
Jul-07

Jul-08

Jul-09Jul-10Jul-11

Jul-12

Jul-13

Jul-14

Source: BAML,

Page | 16

7.3. China Interbank AAA - BBB Corps Fixed RateCurve

7.4. CNH HG Yield Curve
CNH HG Yield Curve

China Interbank AAA - BBB Corps Fixed Rate Curve
June 30, 201518

5.0

Percent

Percent

16
4.5
14
4.0

12
10

3.5
8
3.0

6

6/30/2015

China Interbank AAA Corps Fixed Rate Curve

4

China Interbank AA Corps Fixed Rate Curve

3/31/2015

2.5

China Interbank A Corps Fixed Rate Curve2

6/30/2014

China Interbank BBB Corps Fixed Rate Curve

2.0

0
0

5

10

15

20

25

30

0

35

5

10

15

20

25

30

Source: Bloomberg

7.5. CNH HY Yield Curve

7.6. CNH NR Yield Curve
CNH NR Yield Curve

CNH HY Yield Curve
12.0

35

Source: Bloomberg

6.5

Percent

11.0

Percent

6.0

10.0

5.5

9.0

5.0

8.0
4.5
7.0
4.0
6.0
3.5

5.0

6/30/2015
4.0

6/30/2015

3.0

3/31/2015

3/31/2015

3.0

2.5

6/30/2014

2.0

6/30/2014

2.0
0

1

2

4

3

5

6

0

2

4

6

8

10

12

14

Source: Bloomberg

7.7. Global Returns, Quarter-End

16

Source: Bloomberg

7.8. Global Returns, 2015 Year to Date

Total Return (Global)
2015:Q2

Total Return (Global)
2015 YTD

S&P GSCIFTSE 100

BAML Asian Dollar HY

BAML Asian Dollar HY

MSCI EM LatAm

MSCI EM LatAm

MSCI EM EEMEAMSCI EM EEMEABAML US High Yield Index

BAML US High Yield Index
MSXI EM Asia

BAML Asian Dollar Index

BAML Asian Dollar Index

BAML Asian Dollar IG

BAML Asian Dollar IG
Percent

MSXI EM Asia

BAML Global Credit
BAML Euro Corporate
S&P GSCI Copper

Percent

S&P GSCIFTSE 100

BAML Global Credit
BAML Euro Corporate
S&P GSCI CopperEuro Stoxx 50

Euro Stoxx 50
-10

-5

0

5

10

15

20

25

Source: S&P, BAML,
MSCI

-15

-10

-5

0

5

10

15

20

Source: S&P, BAML,MSCIPage | 17

7.9. Asia Upgrades / Downgrades ex DM Asia

7.10. Asia Upgrades / Downgrades, DM Asia

Standard & Poor's Asia Upgrades/Downgrades ex DM Asia
2012 - 2015:Q1

Standard & Poor's Asia Upgrades/Downgrades, DM Asia Only2012 - 2015:Q1

30

30

Upgrades25

Upgrades25

Downgrades

Downgrades
20

20

15

15

10

10

5

5

0

0
FY
2012

Q1

Q3

Q2

Q4

Q1

2013

Q2

Q3
2014

Q4

Q1

FY

2015

2012

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2014

2013

Source: Standard & Poor's

Q1
2015

Source: Standard & Poor's

7.11. Asian Upgrades & Downgrades, Standard & Poor's, First Quarter 2015
UpgradesHyundai Capital Services Inc. (Hyundai Motor Co.)
Korean Railroad Corp. (Republic of Korea)
Arysta LifeScience Corp.
Hyundai Motor Co.
BOC Aviation Pte. Ltd. (Bank of China Ltd.)Country
Korea, Republic ofKorea, Republic ofJapan
Korea, Republic ofSingaporeDate
1/30/2015
1/20/2015
2/19/2015
1/29/2015
3/19/2015

RatingAA+
BB
AA-

Downgrades
Yanlord Land Group Limited
Nippon Telegraph and Telephone Corp.
Sumitomo Corp.
Sharp Corp.
MagnaChip Semiconductor Corp
Atlas Iron Ltd.
Ausdrill Ltd.
PT Berau Coal Energy Tbk

Country
Singapore
Japan
Japan
Japan
Korea, Republic ofAustralia
Australia
Indonesia

Date
3/31/2015
1/20/2015
3/26/2015
3/3/2015
2/17/2015
1/28/2015
3/20/2015
1/21/2015

RatingB+
AAACCC+
BBB+
CCC-

7.12. Asian Defaults, Standard & Poor's, Second Quarter 2015
Defaults
Sharp Corp.

CountryJapan

Type
Capital Goods

Page | 18

8. Summary of the Methodologies Adopted for this Report
2. G3 Asia ex Developed Market Asia (Japan, Australia, and New Zealand)
Issuance
Bond transactions are sourced primarily from Dealogic, with supplemental information sourced from
Bloomberg. Unless otherwise noted, all issuance are long-term debt. High grade transactions are defined astransactions with a Dealogic “effective” rating of equal or greater than BBB-, and may include unrated
transactions based on issuer and desk notes. High yield transactions are defined as transactions with a
Dealogic “effective” rating of equal or less than BB+, and may also include unrated transactions based on
issuer and desk notes. Unrated deals are those deals with no effective rating from Dealogic.
“All Asia” issuance are defined as being a corporate bond issue having a Dealogic “deal nationality” as within
Asia, regardless of market, including domestic. Sovereign, sub-sovereign, medium-term notes, and agencies
are also included from issuance, while supranational and ABS/MBS issuers are excluded from issuance. Loansare excluded from issuance as well.
“DM”, or Developed Market Asia, include those deals with a Dealogic deal nationality from Australia, Japan,
and New Zealand. “Ex DM Asia” will refer to all deals excluding those deals with a Dealogic deal nationality
from Australia, Japan, and New Zealand.
G3 deals are defined a subset of deals in “All Asia” that are rank eligible, according to Dealogic’s rankeligibility guidelines, with a tranche currency in US dollar (USD), European euro (EUR), or Japanese yen (JPY).
There may exist deals within “All Asia” issuance that are denominated in a G3 currency but are not rankeligible and therefore not included in G3 tables but may be included in all other non-G3 exclusive tables.
“LCY”, or local currency, are defined as a subset of deals in “All Asia” flagged by Dealogic local currency flag.
G3 and LCY deals are not mutually exclusive and may overlap (e.g., in the case of Japanese JPY deals).
All issuance are denoted in USD equivalents based on exchange rates as of the issue date of the bond.
Outstanding
Outstanding figures are sourced from Bloomberg and contain all bonds from its corporate securities
database, including private placements. Structured notes and debt secured by assets are excluded. All othercriteria hew closely to the criteria for issuance.
All outstandings are denoted in USD equivalent based on exchange rates as of quarter-end.
Outstanding G3 deals are defined a subset of deals in “All Asia” that are rated with at least one rating by oneof the four rating agencies: Fitch Ratings, Moody’s, Standard & Poor’s, or DBRS; and denominated in US
dollar (USD), European euro (EUR), or Japanese yen (JPY). Deals that are not rated by one of the four rating
agencies (those deals with a Bloomberg composite rating of “NA”) are excluded. The “NA” exclusion is due tooverlap between rank ineligible deals and those deals with no rating; a close analysis of the data reveals thatthe figures for data excluding “rank ineligible” deals and the figures for data excluding data rated N.A. in
Bloomberg are similar.

Page | 19

2.1., 2.3, 2.5., 2.7., 2.9., 2.11., 2.13., 2.15., 2.17., 2.18.
Data are sourced from Dealogic.
Issuance by country is determined by Dealogic’s deal nationality.
Issuance by tenor is determined by years of maturity at issuance.
Issuance by sector is defined by Dealogic’s General Industry Group (“GIG”) groupings and are not analogous
to Bloomberg’s Sector grouping.
2.2., 2.4., 2.6., 2.8., 2.10., 2.12.
Data are sourced from Bloomberg.
Outstanding by rating are by current composite rating assigned by Bloomberg. Composite ratings byBloomberg are the average of ratings assigned by Moody’s, Standard & Poor’s, Fitch Ratings, and DBRS; aminimum of two ratings must be given to a bond before a composite rating is generated. “NR” denotes abond with a single rating assigned by the four rating agencies, whereas “NA” denotes a bond with no ratingfrom any of the four.
Outstanding by tenor are based on current tenor as quarter-end. “Other” includes those bonds with nolisted maturity date and perpetuals.
3. LCY Asia ex Developed Market Asia (Japan, Australia and New Zealand)
3.1. - 3.4.
Issuance data are sourced from Dealogic according to the criteria outlined in Section 1. Outstanding data aresourced from Bloomberg according to the criteria outlined in Section 1.
4. All Asia
4.1. – 4.9.
Issuance data are sourced from Dealogic according to the criteria outlined in Section 1. Outstanding data aresourced from Bloomberg according to the criteria outlined in Section 1.
5. Domestic CNY
Issuance
Bond transactions for CNY are sourced from Dealogic and are defined as all issued debt denominated inrenminbi (CNY) and in the domestic debt markets. CNY-denominated deals issued in the euro, foreign, orinternational markets are excluded. There are no restrictions on deal type and will include supranationals,
medium-term notes, money market notes, securitisations, and commercial paper debt. Due to the lower
restrictions in CNY issuance, CNY-denominated deals outside of Section 5 and 6 are a subset of the deals
contained in Section 5 and 6.
Outstanding
Bond transactions for CNY are sourced from Bloomberg and are defined as debt denominated in CNY andissued in the domestic or domestic MTN markets. CNY-denominated deals issued in the euro, foreign, orinternational debt markets are excluded. Deals include corporate high grade bonds, high yield bonds,
medium-term notes, money market and commercial paper debt. The combination of CNH and CNY debt
exclude a small minority of dual-currency deals that are non-domestic, non-dim sum debt.
All outstandings are denoted in USD equivalent based on exchange rates as of quarter-end.

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5.1. – 5.8.
Issuance data are sourced from Dealogic in accordance to the criteria specified in Section 5. Outstanding
data are sourced from Bloomberg in accordance to the criteria specified in Section 5.
6. CNH
Issuance
Bond transactions for CNH are sourced from Dealogic and are defined as all debt denominated in renminbi(CNY) issued and in the euro, foreign, or international debt markets. CNY-denominated deals issued in thedomestic market are excluded. There are no restrictions on deal type and will include supranationals,
medium-term notes, money market notes, securitisations, and commercial paper debt. Due to the lower
restrictions in CNH issuance, CNH-denominated deals outside of Section 5 and 6 are a subset of the deals
contained in Section 5 and 6.
All issuance are denoted in USD equivalents based on exchange rates as of the issue date of the bond.
Outstanding
Bond transactions for CNH are sourced from Bloomberg and are defined as debt denominated in CNY andissued in the euro, foreign, or international debt markets. CNY-denominated deals issued in the domestic
market are excluded. Deals include corporate high grade bonds, high yield bonds, medium-term notes,
money market, securitisations, and commercial paper debt. The combination of CNH and CNY debt exclude asmall minority of dual-currency deals that are non-domestic, non-dim sum debt.
All outstandings are denoted in USD equivalent based on exchange rates as of quarter-end.
6.1. – 6.8.
Issuance data are sourced from Dealogic in accordance to the criteria specified in Section 4. Outstanding
data are sourced from Bloomberg in accordance to the criteria specified in Section 6.
7. Spreads, Credit Quality & Total Return7.1. – 7.2. Global Corporate Spreads
High grade and high yield US and European corporate spreads are sourced from Bank of America-Merrill
Lynch (BAML) indices. Spreads are over government debt.
US high grade spreads are sourced from BAML’s US Corporate Index (C0A0) and tracks the performance of
US dollar denominated investment grade corporate debt publicly issued in the US domestic market.
Qualifying securities must have an investment grade rating (based on an average of Moody’s, S&P and Fitch),at last 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity
as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of USD 250 million.
Original issue zero coupon bonds, 144a securities (with and without registration rights), and pay-in-kindsecurities (including toggle notes) are included in the index. Fixed-to-floating rate securities are included
provided they are callable within the fixed rate period and are at least one year from the last call prior to thedate the bond transitions from a fixed to a floating rate security. Contingent capital securities, including
those with automatic principal write-down provisions, are included in the index provided they do not havean automatic common equity conversion, unless the conversion is activated by a regulatory authority inwhich case they are included. Other hybrid capital securities, such as those that potentially convert into
preference shares, those with both cumulative and non-cumulative coupon deferral provisions, and thosewith alternative coupon satisfaction mechanisms, are also included in the index. Securities issued or
marketed primarily to retail investors, equity-linked securities, securities in legal default, hybrid securitized

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corporates, Eurodollar bonds (USD securities not issued in the US domestic market), taxable and tax-exempt
US municipal securities and DRD eligible securities are excluded from the index.
European high grade spreads are sourced from BAML’s Euro Corporate Index (ER00) and tracks theperformance of EUR denominated investment grade corporate debt publicly issued in the Eurobond or Euro
member domestic markets. Qualifying securities must have an investment grade rating (based on an averageof Moody’s, S&P and Fitch), at last 18 months to final maturity at the time of issuance, at least one year
remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amountoutstanding of EUR 250 million. Original issue zero coupon bonds and pay-in-kind securities, including toggle
notes, are included in the index. Callable perpetual securities qualify provided they are at least one year
from the first call date. Fixed-to-floating securities also qualify provided they are callable within the fixed
rate period and are at least one year from the last call prior to the date the bond transitions from a fixed to afloating rate security. Contingent capital securities are included in the index provided they do not have an
automatic common equity conversion feature; these securities with triggers activated by a regulatory
authority, including conversions into equity, qualify for inclusion. Also qualifying for inclusion are contingent
capital securities with principal write-down triggers. Hybrid capital securities qualify for the index, including
those potentially converting into preference shares, those with both cumulative and non-cumulative coupon
deferral provisions, and those with alternative coupon satisfaction mechanisms. Euro legacy currency,
equity-linked and securities in legal default are excluded from the Index. Securities issued or marketedprimarily to retail investments do not qualify for inclusion in the index.
US high yield spreads are sourced from BAML’s US High Yield Index (H0A0) and tracks the performance of US
dollar denominated below investment grade corporate debt publicly issued in the US domestic market.
Qualifying securities must have a below investment grade rating (based on an average of Moody’s, S&P and
Fitch), at last 18 months to final maturity at the time of issuance, at least one year remaining term to final
maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100
million. In addition, qualifying securities must have risk exposure to countries that are members of the FXG10, Western Europe or territories of the US and Western Europe. The FX-G10 includes all Euro members,
the US, Japan, the UK, Canada, Australia, New Zealand, Switzerland, Norway and Sweden. Original issue zero
coupon bonds, 144a securities (with and without registration rights), and pay-in-kind securities (including
toggle notes) are included in the index. Callable perpetual securities are included provided they are at least
one year from the first call date. Fixed-to-floating rate securities are included provided they are callable
within the fixed rate period and are at least one year from the last call prior to the date the bond transitions
from a fixed to a floating rate security. Contingent capital securities, including those with automatic principal
write-down provisions, are included in the index provided they do not have an automatic common equity
conversion, unless the conversion is activated by a regulatory authority in which case they are included.
Other hybrid capital securities, such as those that potentially convert into preference shares, those withboth cumulative and non-cumulative coupon deferral provisions, and those with alternative coupon
satisfaction mechanisms, are also included in the index. Securities issued or marketed primarily to retailinvestors, equity-linked securities, securities in legal default, hybrid securitized corporates, Eurodollar bonds(USD securities not issued in the US domestic market), taxable and tax-exempt US municipal securities and
DRD eligible securities are excluded from the index.
European high yield spreads are sourced from BAML’s Euro High Yield Index (HE00) and tracks theperformance of EUR denominated below investment grade corporate debt publicly issued in the euro
domestic or eurobond markets. Qualifying securities must have a below investment grade rating (based on
an average of Moody’s, S&P and Fitch), at least 18 months to final maturity at the time of issuance. In
addition, qualifying securities must have at least one year remaining term to final maturity, a fixed coupon
schedule and a minimum amount outstanding of EUR 100 million. Original issue zero coupon bonds, “Global”

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securities (debt issued simultaneously in the Eurobond and euro domestic markets), 144a securities and payin-kind securities, including toggle notes, qualify for inclusion in the index. Callable perpetual securities
qualify provided they are at least one year from the first call date. Fixed-to-floating securities also qualify
provided they are callable within the fixed rate period and are at least one year from the last call prior to thedate the bond transitions from a fixed to a floating rate security. Contingent capital securities are included in
the index provided they do not have an automatic common equity conversion feature; these securities withtriggers activated by a regulatory authority, including conversions into equity, qualify for inclusion. Also
qualifying for inclusion are contingent capital securities with principal write-down triggers. Hybrid capitalsecurities qualify for the index, including those potentially converting into preference shares, those withboth cumulative and non-cumulative coupon deferral provisions, and those with alternative coupon
satisfaction mechanisms. Euro legacy currency, equity-linked and securities in legal default are excluded
from the Index. Securities issued or marketed primarily to retail investments do not qualify for inclusion in
the index.
Asian high grade and investment grade spreads are sourced from J.P. Morgan’s Asia Credit Index (JACI) andtracks the performance of USD-denominated Asian debt in the Asian ex-Japan region. Qualifying countries
are those Asian region excluding Japan, including: China, Hong Kong, Indonesia, India, South Korea, Sri Lanka,
Mongolia, Macao, Malaysia, the Philippines, Pakistan, Singapore, Thailand, Taiwan and Vietnam. Minimum
deal sizes are $150 million and at least 12 months to final maturity at time of issuance. Fixed and floating
rate instruments, and debt issued by sovereign, quasi-sovereign and corporate entities qualify for inclusion.
Convertible bonds do not qualify for inclusion in the index.
7.3. China Interbank AAA Yield Curve
The curve is comprised of yuan-denominated fixed-rate corporate bonds that are traded on the China
Interbank exchange. The bonds are rated AAA by local rating agencies. The values for the points on the curve
are contributed by China Government Securities Depository Trust & Clearing Co Ltd (CDC).
7.4. – 7.6. China CNH Yield Curves
The securities underlying this curve are a subset of CNH data and sourced from Bloomberg; please see
section 6 for more details regarding criteria. Ratings are determined by Bloomberg composite rating. Curves
are fitted using Nelson-Siegel regression on mid-yield to maturity of underlying bonds.
7.7. – 7.8. Total Return (Quarter-End and YTD)
Total return data are sourced from various global bond and equity, including, but not limited to: the Bank ofAmerica-Merrill Lynch, Standard & Poor’s, J.P. Morgan, and MSCI.
7.9. – 7.11. Asian Issuer Rating Actions
European issuer upgrades and downgrades are sourced from S&P. and are a combination of both emerging
market, Japan, Australia, and New Zealand rating actions. Multiple upgrades or downgrades of a single issuer
are counted separately. Rating actions are inclusive of both corporate (both credit, policy, or merger-related)
as well as sovereign ratings.
Due to publication timing, these data set may run on a quarter lag.
7.12. Asian Issuer Defaults
European issuer upgrades and downgrades are sourced from S&P and are a combination of both emerging
market, Japan, Australia, and New Zealand defaults reported. Defaults are inclusive of both corporate (bothcredit, policy, or merger-related) as well as sovereign defaults.

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9. Disclaimer
The information and opinion commentary in this Asia Credit Report (Report) was prepared by the leveraged
finance division of the Asia Securities Industry and Financial Markets Association (ASIFMA) and the Securities
Industry and Financial Markets Association (SIFMA). ASIFMA and SIFMA believe that the information in theReport, which has been obtained from multiple sources believed to be reliable, is reliable as of the date of
publication. In no event, however, does either of ASIFMA and SIFMA make any representation as to theaccuracy or completeness of such information. ASIFMA and SIFMA have no obligation to update, modify oramend the information in this Report or to otherwise notify readers if any information in the Reportbecomes outdated or inaccurate. ASIFMA and SIFMA will make every effort to include updated information
as it becomes available and in subsequent reports. As information is collected from multiple sources andestimates by the individual sources may differ from one another, estimates for similar types of data could
vary within the Report.

10. Credit
ASIFMA
Vijay Chander, Executive Director, Fixed Income
SIFMA
Kyle Brandon, Managing Director, Director of Research
Sharon Sung, Assistant Vice President, Research

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