ASIA CREDIT REPORT

Third Quarter 2018
PREPARED IN PARTNERSHIP WITH

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Table of Contents
G3 Asia ex Developed Market Asia (Japan, Australia and New Zealand) ........................................................ 1
1.1. G3 ex DM Asia: Total Issuance ............................................................................................................... 3
1.2. G3 ex DM Asia: Total Outstanding ......................................................................................................... 3
1.3. G3 ex DM Asia: HG Issuance .................................................................................................................. 3
1.4. G3 ex DM Asia: HG Outstanding ............................................................................................................ 3
1.5. G3 ex DM Asia: HY Issuance ................................................................................................................... 3
1.6. G3 ex DM Asia: HY Outstanding ............................................................................................................. 3
1.7. G3 ex DM Asia: Total Issuance by Country ............................................................................................ 4
1.8. G3 ex DM Asia: Total Outstanding by Country ...................................................................................... 4
1.9. G3 ex DM Asia: Total Issuance by Sector ............................................................................................... 4
1.10. G3 ex DM Asia: Total Outstanding by Sector ....................................................................................... 4
1.11. G3 ex DM Asia: HG Issuance by Rating ................................................................................................ 4
1.12. G3 ex DM Asia: HG Outstanding by Rating .......................................................................................... 4
1.13. G3 ex DM Asia: HY Issuance by Rating ................................................................................................. 5
1.14. G3 ex DM Asia: HY Outstanding by Rating ........................................................................................... 5
1.15. G3 ex DM Asia: Total Issuance by Tenor .............................................................................................. 5
1.16. G3 ex DM Asia: Outstanding by Remaining Tenor ............................................................................... 5
1.17. Asia ex DM: Total Leveraged Loan Issuance ........................................................................................ 5
1.18. Asia ex DM: Total Leveraged Loan Issuance by Use of Proceeds ........................................................ 5LCY Asia ex Developed Market Asia (Japan, Australia and New Zealand) ....................................................... 6
2.1. LCY ex DM Asia: Total Issuance .............................................................................................................. 6
2.2. LCY ex DM Asia: Total Outstanding ........................................................................................................ 6
2.3. LCY ex DM Asia: Issuance by Currency ................................................................................................... 6
2.4. LCY ex DM Asia: Issuance by Sector ....................................................................................................... 6
2.5. LCY ex DM Asia: Outstanding by Country .............................................................................................. 6
All Asia ............................................................................................................................................................. 7
3.1. G3 All: Total Issuance ............................................................................................................................. 8
3.2. G3 All: Total Outstanding ....................................................................................................................... 8
3.3. G3 All: HG Issuance ................................................................................................................................ 8
3.4. G3 All: HG Outstanding .......................................................................................................................... 8
3.5. G3 All: HY Issuance ................................................................................................................................. 8
3.6. G3 All: HY Outstanding ........................................................................................................................... 8
3.7. LCY All: Total Issuance ............................................................................................................................ 9
China – Domestic ........................................................................................................................................... 10
4.1. Domestic CNY All: Total Issuance ......................................................................................................... 11
4.2. Domestic CNY All: Total Outstanding ................................................................................................... 11
4.3. Domestic CNY All: Issuance by Rating .................................................................................................. 114.4. Domestic CNY All: Outstanding by Rating ............................................................................................ 11
4.5. Domestic CNY All: Issuance by Tenor ................................................................................................... 11
4.6. Domestic CNY All: Outstanding by Remaining Tenor........................................................................... 114.7. Domestic CNY All: Issuance by Sector .................................................................................................. 124.8. Domestic CNY All: Outstanding by Sector ............................................................................................ 12Page | i

China – CNH ................................................................................................................................................... 13
5.1. CNH All: Total CNH Issuance ................................................................................................................ 14
5.2. CNH All: Total Outstanding .................................................................................................................. 14
5.3. CNH All: Issuance by Rating ................................................................................................................. 14
5.4. CNH All: Outstanding by Rating ........................................................................................................... 14
5.5. CNH All: Issuance by Tenor .................................................................................................................. 14
5.6. CNH All: Outstanding by Remaining Tenor .......................................................................................... 14
5.7. CNH All: Issuance by Sector ................................................................................................................. 15
5.8. CNH All: Outstanding by Sector ........................................................................................................... 15
Spreads, Credit & Total Return ...................................................................................................................... 16
6.1. Global HG Corporate Spreads .............................................................................................................. 176.2. Global HY Corporate Spreads............................................................................................................... 176.3. CNH HG Yield Curve ............................................................................................................................. 176.4. CNH HY Yield Curve .............................................................................................................................. 176.5. CNH NR Yield Curve.............................................................................................................................. 176.6. Global Returns, Quarter-End ............................................................................................................... 176.7. Global Returns, 2018............................................................................................................................ 18
6.8. Asia Upgrades / Downgrades ex DM Asia ............................................................................................ 18
6.9. Asia Upgrades / Downgrades, DM Asia ............................................................................................... 18
6.10. Asian Upgrades & Downgrades, Standard & Poor's, Third Quarter 2018 ......................................... 18
Summary of the Methodologies Adopted for this Report ............................................................................ 19
Disclaimer ...................................................................................................................................................... 24
Credit ............................................................................................................................................................. 25

Page | ii

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 Third
Quarter 2018
Total G3 issuance in 3Q’18 came in at USD 40.4 billion (bn) as of September 30, down 42.2% quarter-overquarter (qoq) from 2Q’17 (USD 70.0bn) and down 41.1% year-over-year (yoy), inclusive of high grade (HG),
high yield (HY), and unrated deals. The Sino-US trade war and consequent weakness in the Chinese markets,
rising oil prices and consistent weakness in the Asian EM space as on account of relentless USD strength, hasadversely impacted issuance in the two of the region’s key markets, China and India. In addition, rising USinterest rates and the first signs of EM weakness spreading globally, are likely to keep Asian credit markets on
the defensive going into the final quarter of 2018.
1) YTD HG issuance (of USD 139.9bn) continues to easily outpace HY issuance of USD 34.4bn. HY issuance
dropped 51.8% in the third quarter, falling to USD 6.6bn from 2Q’18 issuance of USD 13.6bn; while HY
issuance in 2018 is not expected to reach 2017’s peak of USD 66.0bn, 2017 is likely to reach the second
highest annual volume in high yield issuance.
2) A combination of individual sector downgrades, such as those carried out by ratings agency S&P, on anumber of Chinese Local Government Financing Vehicles (LGFVs) and market resistance, even when
coupons appear to be generous (such as those for certain Indonesian HY issuers) have led to a
combination of deals being delayed, deal sizes being reduced or even being pulled. This has also
contributed to the fall in G3 debt issuance volumes.
3) However, according to Dealogic, with Asian companies having to refinance just a shade under USD 40
bn in debt, there may be no alternative but to tap the markets at whatever price – this could contributeto further spread widening and sustained market weakness in the days and weeks ahead – the current
nervousness in both developed markets and the EM world, suggests that investors in Asian debt will
be extremely cautious, going into yearend.
4) One possibility is that Asian issuers may choose to tap the LCY bond markets – which look increasingly
attractive, as sustained USD strength might convince Asian borrowers to look at the onshore debt
markets at the margin. Under the circumstances, it is possible that the gradual revival seen in theoffshore renminbi (or CNH) dim sum bond market in Hong Kong, could gain further momentum.
Key trends in Asia (ex-Japan, Australia and New Zealand) G3 & LCY bond issuance
For the third quarter 2018, total G3 issuance stood at USD 40.4bn, a decline of 42.2% and 41.1% qoq and yoy.
China remains the largest issuing country in the third quarter, dominating Asian issuance at USD 26.3bn, or
approximately 65.2% of G3 issuance; of third quarter volume, USD 18.1bn and USD 5.9bn were in HG and HYdeals, respectively. South Korea continues to remain the second largest issuer with USD 7.7bn of issuance,
followed by Singapore with USD 1.9bn. Year to date, G3 issuance totaled USD 186.1bn, composed of $139.9bn
in HG issuance, USD 34.4bn in HY issuance and the balance in unrated issuance; G3 is issuance is on track tofall short of 2017 volumes of USD 316.0bn but remain similar to 2016 volumes.
Finance remains the largest sector of G3 issuance in the third quarter (USD 20.4bn), followed by realestate/property (USD 10.3bn) and transportation (USD 1.8bn).
In terms of ratings, within the HG space, BBB transactions accounted for the largest share of deals priced
during the quarter, with USD 8.4bn in total issuance, followed by A+ rated transactions totaling USD 7.1bn.

Page | 1

Within HY issuance, the BB category led with USD 1.9bn of issuance, followed by B+ rated transactions of USD
1.4bn.
By tenor, Asia ex-Japan, Australia and NZ G3 deals with tenors of 5 years or less continued to account for thebulk of issuance in 3Q’18, with a total of USD 32.0bn in short tenor issues being priced during the quarter. Of
these, USD 24.6bn were HG deals, USD 5.1bn were HY deals and the balance unrated.
Overall G3 debt outstanding in the region stood at USD 1.2tn at the end of September 2018, increasing 3.4%
qoq and 16.6% yoy. High grade debt accounted for the bulk of total outstanding debt at USD 756.6bn (a 2.3%
increase qoq and 14.3% increase yoy), followed by unrated debt at USD 249.2bn (a growth of 2.3% qoq and20.6% yoy). HY debt was USD 157.4bn (an increase of 11.3% qoq and 21.8% yoy).
China (with USD 572.9bn), South Korea (with USD 129.3bn) and Hong Kong (with USD 113.2bn) remain thethree regions with the largest shares of G3 debt outstanding. Ratings-wise among HG issuers, deals rated A+(USD 134.3bn) account for the largest share of debt outstanding, while BB transactions outstanding (USD
32.0bn) just edged out B+ (USD 31.8bn) in the HY space. By sector, financials with a total of USD 367.4bn
accounted for 32% of outstanding G3 paper, followed by sovereigns (USD 255.0bn) and real estate (USD
120.5bn). Finally, deals with remaining tenors of 5 years or less (USD 733.1bn) accounted for the bulk of total
Asia (ex-Japan, Australia and NZ) debt outstanding.
Turning to the LCY debt markets, USD 162.5bn in total LCY-denominated debt was issued in Asia (ex-Japan,
Australia & NZ) in 3Q’18, a decline of 22.1% qoq (USD 208.7bn) and a decline of 37.7% yoy (USD 260.7bn).
China remains the dominant issuer in the LCY debt markets in the third quarter, with USD 139.1bn issued,
followed distantly behind by South Korea (USD 7.6bn) and India (USD 4.9bn). Finance continues to remain thelargest category in 3Q’18 with USD 65.9bn issued, followed by real estate/property (USD 16.7bn) andconstruction/building (USD 16.7bn).
Total LCY debt outstanding at the end of 3Q’18 in Asia (ex-Japan, Australia and NZ) stood at USD 18.3tn, risingby 5.6% qoq, with HG and HY debt outstanding declining 0.8% and 54.9% qoq, respectively. Unrated debt
increased 5.9% to $17.7bn. China remains the bulk of total outstanding LCY debt at USD 12.2tn (representing
two-thirds of all LCY debt), followed by India (USD 2.5tn) and South Korea (USD 1.5tn).
State of the Asian leveraged loan market
Asian leveraged loan debt, excluding developed market Asia, rose slightly USD 47.4bn in 3Q’18, an increase of
5.3% qoq but a decline of 23.0% yoy. Leading sectors in 3Q’18 issuance were chemicals (USD 13.4bn), finance(USD 7.9bn), and transportation (USD 5.3bn). Leveraged loan issuance was primarily used for project financing(USD 19.4bn) and repayment of debt (USD 6.7bn). Sponsored loan deals, as a percentage of issuance in thethird quarter, slightly increased to 4.8% (from 3.2% for 2Q’18) of deals by dollar amount. Year to date,leveraged loan issuance totaled USD 146.1bn.
Looking ahead, heightened market risks could lead to a rapid deterioration in the quality of leveraged loans,leading to lower recovery rates than in past downturns, according to ratings agency Moody’s. Thus, while 2018has been a year of innovation in the Asian CLO market, the negative market trends that have very much beenin evidence in the third quarter, could also have a dampening effect on the Asian leveraged loan market going
into 2019.

Page | 2

1.1. G3 ex DM Asia: Total Issuance1.2. G3 ex DM Asia: Total Outstanding

G3 ex DM Asia: Total Issuance2010 - 2018:Q3
350,000

G3 ex DM Asia: Total Outstanding
2013:Q3 - 2018:Q3$ millions

1,400

NR

300,000

HY

NR
1,200

HG

250,000

1,000

200,000$ billions

HY
HG

800

150,000

600

100,000
400

50,000
200

0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018

0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Q3

2013

2014

2015

2016

2017

Source: Dealogic

1.3. G3 ex DM Asia: HG Issuance1.4. G3 ex DM Asia: HG Outstanding

G3 ex DM Asia: HG Issuance2010 - 2018:Q3
250,0002018
Source: Bloomberg

G3 ex DM Asia: HG Outstanding
2013:Q3 - 2018:Q3$ millions

800$ billions

700

200,000600
150,000

500
400

100,000

300
200

50,000

100

0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018

0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Q3

2013

2014

2015

2016

2017

Source: Dealogic

1.5. G3 ex DM Asia: HY Issuance1.6. G3 ex DM Asia: HY Outstanding

G3 ex DM Asia: HY Issuance2010 - 2018:Q3
100,0002018
Source: Bloomberg

G3 ex DM Asia: HY Outstanding
2013:Q3 - 2018:Q3$ millions

Corp HY andNR
Sovereign
HY and NR

90,00080,00070,000450$ billions

400

NR

350

HY

300

60,000250

50,00040,000200

30,000150

20,000100

10,000

50

0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2018

2017

2018
Q3

0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013

Source: Dealogic

2014

2015

2016

2017

2018
Source: Bloomberg

Page | 3

1.7. G3 ex DM Asia: Total Issuance by Country

1.8. G3 ex DM Asia: Total Outstanding by Country

G3 ex DM Asia: Total Issuance by Country
2018:Q3G3 ex DM Asia: Total Outstanding by Country
2018:Q3$ millions$26,349.8

NR

25,000

HG
HY

20,00015,00010,000$7,652.3

5,000$1,850.00

ChinaSouth Korea$1,150.0 $1,044.5

Singapore

India

Hong Kong$650.0$600.0$500.0$340.0$230.0$50.0Indonesia

Philippines

Papua New
GuineaMalaysia

TaiwanThailand

CHINA
SOUTH KOREA
HONG KONG
INDONESIAINDIA
SINGAPORE
PHILIPPINESMALAYSIATHAILANDSRI LANKAPAKISTANMACAUMONGOLIATAIWANVIETNAMPAPUA N.GUINEAMALDIVESBANGLADESHCAMBODIA
FIJI$ billions

30,000

0

100

200

300

400

500

1.9. G3 ex DM Asia: Total Issuance by Sector

600

700

Source: Bloomberg

Source: Dealogic

1.10. G3 ex DM Asia: Total Outstanding by Sector

G3 ex DM Asia: Total Issuance by Sector
2018:Q3G3 ex DM Asia: Outstanding by Sector
2018:Q3

Finance
Real Estate/Property

HY

Financials

Transportation

HG

Government

Utility & Energy

NR

Real Estate

Construction/Building

EnergyMetal & Steel

Utilities

Insurance

HY
HG
NR

Industrials

Food & Beverage
Consumer Discretionary
Materials
Consumer Staples$ millions

Oil & Gas
Government
RetailTextileMiningCommunications$ billions

Telecommunications

Technology
Health Care

0

5,000

10,00015,00020,00025,000

0

50

100

150

200

250

300

Source: Dealogic

1.11. G3 ex DM Asia: HG Issuance by Rating

350

400

Source: Bloomberg

1.12. G3 ex DM Asia: HG Outstanding by RatingG3 ex DM Asia: HG Issuance by Rating
2018:Q3G3 ex DM Asia: HG Outstanding by Ratings
2018:Q3

BBB+

A

BBB-

A+

BBB

A-

AAA

AA
AA+

AA-

AA-

AA

AAA

AA

BBB

$ billions$ millions

A+

BBB+

BBB0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Source: Dealogic

0

20

40

60

80

100

120

140

160

Source: Bloomberg

Page | 4

1.13. G3 ex DM Asia: HY Issuance by Rating

1.14. G3 ex DM Asia: HY Outstanding by RatingG3 ex DM Asia: HY Issuance by Rating
2018:Q3G3 ex DM Asia: HY Outstanding by Rating
2018:Q3BB+

NR

Sovereign

B

Corp
BB-

B+
B-

BB

BB
BB+

B+

BBB-

Not
rated

CCC
CCC+

Corp

CCC-

Sovereign

DDD+
0

500

1,000

1,500

2,000

2,500

3,000

0

50

100

150

200

250

Source: Dealogic

1.15. G3 ex DM Asia: Total Issuance by Tenor$ billions$ millions

C+

B

300

Source: Bloomberg

1.16. G3 ex DM Asia: Outstanding by Remaining
Tenor

G3 ex DM Asia: Total Issuance by Tenor
2018:Q3G3 ex DM Asia: Outstanding by Remaining Tenor
2018:Q3

10+ Years

HY

7 - 10 Years

HY

10 +

HG

HG

NR

NR
8 - 10 Years

5 - 7 Years

5 - 7 Years

Other

0

5,000

10,00015,00020,00025,00030,00035,000$ billions$ millions

0 - 5 Years

<5

0

100

200

300

400

500

Source: Dealogic

1.17. Asia ex DM: Total Leveraged Loan Issuance

600

700

800

Source: Bloomberg

1.18. Asia ex DM: Total Leveraged Loan Issuance by
Use of Proceeds

Asia ex DM: Leveraged Loan Issuance2010 - 2018:Q3
300,000$ millions

Asia ex DM: Leveraged Loan Issuance by Use of Proceeds
2018:Q3

250,000

Project Financing
200,000

Repay Debt
Refinancing

150,000

Capital Expenditures
General Corporate Purposes

100,000

Acquisitions
Working Capital

50,000

YTD
2010

2011

2012

2013

2014

2015

2016

2017

2018

2017

2018
Q3

Source: Dealogic

Millions

Property
0

LBO/MBO
Aircraft
0

5,000

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

Page | 5

LCY Asia ex Developed Market Asia (Japan, Australia and New
Zealand)2.1. LCY ex DM Asia: Total Issuance2.2. LCY ex DM Asia: Total Outstanding

LCY ex DM Asia: Total Issuance2010 - 2018:Q3
1,400,000

LCY ex DM Asia: Total Outstanding
2013:Q3 - 2018:Q3$ millions

20,0001,200,000

18,000$ billions

NR
HY

16,0001,000,000

HG

14,000800,000

12,00010,000600,000

8,000
400,000
6,000

200,000

4,000
2,000

0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018

0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Q3

2013

2014

2015

2016

2017

Source: Dealogic

2.3. LCY ex DM Asia: Issuance by Currency

2.4. LCY ex DM Asia: Issuance by Sector

LCY ex DM Asia: Issuance by Currency
2018:Q3

LCY ex DM Asia: Issuance by Sector
2018:Q3$7,625.2

INR$4,891.3

SGD$4,842.6

TWD$2,069.9$1,881.2$1,289.3

PHP$431.1

CNH$145.6

HKD$133.8ISD$ millions

THB

MYR

$73.2
0

20,00040,00060,00080,000100,000

120,000

140,000

160,000

Source: Dealogic

Finance
Real Estate/Property
Construction/Building
Utility & Energy
Transportation
Holding Companies
Mining
Metal & SteelFood & Beverage
Oil & Gas
Computers & Electronics
Auto/Truck
Chemicals
RetailGovernment
Insurance
Telecommunications
Healthcare
Professional Services
Consumer Products
Machinery
AgribusinessTextileDining & Lodging
Leisure & Recreation
DefenseForestry & Paper
Publishing$65,896.7$16,722.5$16,438.2$14,090.3$8,064.8$6,717.0$6,233.8$5,654.9$2,475.9$2,320.5$2,168.6$2,054.4$1,513.3$1,510.4$1,384.0$1,316.3$1,209.8$1,024.2$1,020.6$967.1$955.7$645.5$557.2$508.1$405.6$365.8$229.5$29.3
010,00020,00030,000$ millions$139,096.8

CNY
KRW

2018
Source: Bloomberg

40,00050,00060,00070,000Source: Dealogic

2.5. LCY ex DM Asia: Outstanding by Country
LCY ex DM Asia: Outstanding by Country
2018:Q3$12,210.4

CHINA
INDIA
SOUTH KOREA
MALAYSIATHAILANDTAIWANSINGAPORE
INDONESIAHONG KONG
PHILIPPINESPAKISTAN
VIETNAM
SRI LANKABANGLADESHPAPUA N.GUINEA
LAOS
FIJI
AFGHANISTANMONGOLIAMACAUBRUNEI$2,481.3$1,543.6

0

2,000$ millions$386.3$364.0$279.1$273.7$269.5$214.4$126.3
$72.3
$55.5
$39.5
$18.9
$4.4
$2.1
$0.9
$0.5
$0.5
$0.3
$0.3
4,000

6,000

8,000

10,00012,00014,000Source: Bloomberg

Page | 6

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) was USD 77.7bn in the third quarter of
2018, a steep decline of 49.0% qoq and 60.3% yoy. In 3Q’18, total HG G3 issuance in Asia was USD 52.6bn, adecline of 52.3% qoq and 63.2% yoy; HY issuance was USD 7.0bn, a decline of 66.3% qoq and 72.3% yoy; andunrated issuance was USD 18.1bn, a decline of 15.5% qoq and a 34.3% yoy. Year to date, G3 issuance including
developed market Asia totaled USD 379.1bn, on pace to be well below the highs of 2016 and 2017.
LCY debt issuance, including Japan, Australia, and New Zealand, fell to USD 424.5bn in the third quarter of
2018, a decline of 17.5% qoq and 29.5% yoy, comprised of USD 298.5bn in HG issuance, USD 5.0bn in HY
issuance and USD 121.0bn in unrated issuance. Year to date, LCY debt issuance totaled USD 1.5tn, a decline of
12.1% from the first three quarters of 2017.
Key highlights are as follows:1)

EM currency weakness, coupled with differing policy responses throughout the region, hasresulted in yields diverging across the Asian markets – Tightening in Malaysia and the Philippines
and the rupee (INR) weakness in India, has led to rising LCY yields in these countries – Any signthat USD strength has run its course, coupled with the attractive yields on offer, could attract
renewed inflows into these countries. On the other hand, China has responded with policy
stimulus and besides, there is no indication that the renminbi (CNY) has bottomed. Uncertainties
still abound with respect to the future direction of the trade war and US-Chinese relations acrossthe spectrum. This could keep Chinese assets on the defensive.

2) On the other hand, some of the negatives on the PRC macro front are offset by the fact that China
is a leading player in the green bond market globally. According to the Climate Bonds Initiative, a
total of USD 13bn in Chinese green bonds was issued in 1H’18 (out of a total of USD 74bn in suchbonds being issued globally in the same period – the figure has since risen to over USD 100bn intotal issuance in the first nine months of the year). In addition to green bonds, the opening of the“Bond Connect” channel for foreign investment into China, which has considerably streamlined
overseas investor access to wthe local Chinese markets, is also a positive which should support
Chinese domestic issuance at the margin.

Page | 7

3.1. G3 All: Total Issuance3.2. G3 All: Total Outstanding

G3 All: Issuance2010 - 2018:Q3
800,000

G3 All: Outstanding in Asia
2013:Q3 - 2018:Q3
12,200$ millions

700,000
600,000

NR

12,100HG

12,000HY

11,900500,000$ billions

11,80011,700400,000

11,600300,000
11,500200,000

11,400100,000

11,300
11,200

0

YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018

11,100Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Q3

2013

2014

2015

2016

Source: Dealogic

3.3. G3 All: HG Issuance

2018
Source: Bloomberg

3.4. G3 All: HG Outstanding

G3 All: HG Issuance2010 - 2018:Q3
600,000

2017

G3 All: HG Outstanding
2013:Q3 - 2018:Q3$ millions$ billions

12,000500,000

10,000400,000

8,000

300,000

6,000

200,000

4,000

100,000

2,000

0
YTD

2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018

0

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Q3

2013

2014

2015

2016

2017

3.5. G3 All: HY Issuance3.6. G3 All: HY Outstanding

G3 All: HY Issuance2010 - 2018:Q3
250,0002018
Source: Bloomberg

Source: Dealogic

G3 All: HY Outstanding
2013:Q3 - 2018:Q3$ millions

12,000$ billions

Corp HY & NR
200,000

10,000

Sovereign HY
& NR

8,000

150,000

6,000

100,000

4,000

NR

50,000

HY

2,000
0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2018

2017

2018
Q3

0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013

Source: Dealogic

2014

2015

2016

2017

2018
Source: Bloomberg

Page | 8

3.7. LCY All: Total Issuance
LCY All: Total Issuance in Asia
2010 - 2018:Q3
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
2010

2011

2012

2013

2014

2015

2016

2017

2018

2017

2018
Q3

Source: Dealogic

Page | 9

China – Domestic
Total Issuance & Outstanding – Domestic CNY issuanceTotal domestic CNY issuance stood at USD 139.5bn in the third quarter of 2018, down 11.1% from the second
quarter (USD 157.0bn) and 31.7% yoy (USD 204.5bn). By tenor, 71.4% of third quarter issuance (USD 99.7bn)
would mature in five years or less, followed by the 7-10 year bucket (USD 24.1bn, or 17.3% of issuance). By
sector, finance led issuance totals (USD 52.3bn), followed by construction (USD 15.8bn) and real estate (USD
15.0bn). Year to date, domestic issuance totaled USD 423.2bn, a decline of 6.0% from the first three quartersof 2017. Outstanding domestic CNY debt stood at USD 12.1tn at the end of third quarter 2018, with sovereigns
leading totals (USD 7.0tn), followed by financials (USD 2.9tn) and industrials (USD 959.7bn).
Some of the same factors that underpinned issuance earlier in 2018 should ensure that despite the marginal
falls on a qoq and yoy basis, overall Chinese domestic issuance should remain healthy in absolute terms. These
factors are as follows:a) Sovereign panda issuance, some of it linked to the Belt and Road Initiative (BRI), should continue tobe robust, going forward.
b) Refinancing requirements across the board – for the property sector, LGFVs and banks/financial
institutions – given the large volumes of maturing debt, should also support issuance.
c) Finally, at a time of great economic uncertainty, Chinese authorities would not be too pleased to see
economic growth slow down too sharply. A range of stimulus measures, aimed at supporting bothconsumer spending and investment, will also result in greater volumes of debt from a range of issuers,
at the margin.

Page | 10

4.1. Domestic CNY All: Total Issuance4.2. Domestic CNY All: Total Outstanding

Domestic CNY All: Total Domestic Issuance2010 - 2018:Q3
1,200,000

Domestic CNY All: Total Outstanding
2014:Q1 - 2018:Q3$ millions$ trillions

14

1,000,000

12

800,000

10
8

600,000

6

400,000

4
200,000
2
0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018
Q3

0
2014Q1

2014Q3

2015Q1

2015Q3

2016Q1

2016Q3

2017Q1

Source: Dealogic

4.3. Domestic CNY All: Issuance by Rating

2017Q3

2018Q1

2018Q3

Source: Bloomberg

4.4. Domestic CNY All: Outstanding by Rating
Domestic CNY All: Outstanding By Rating
2018:Q3

Domestic CNY All: Issuance by Rating2010 - 2018:Q3$ millions
100%

Not rated
BB
A
AAA

90%
80%
70%

B
BBB
AA

60%

50%

$11.633

40%
30%
20%
10%
0%
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018
Q3

0

2

4

6

8

10

4.5. Domestic CNY All: Issuance by Tenor

12

14

Source: Bloomberg

Source: Dealogic

4.6. Domestic CNY All: Outstanding by Remaining
Tenor

Domestic CNY All: Total Issuance by Tenor
2010 - 2018:Q3

Domestic CNY All: Outstanding By Remaining Tenor
2018:Q3100%

9,000,000$ millions

90%
8,000,000

80%$8,557,088.3
7,000,000

70%

6,000,000

60%
50%

Other

5,000,000

40%

10+ Years

4,000,000

30%

7 - 10 Years

20%
10%

3,000,000

5 - 7 Years$1,813,907.9

2,000,000

13 Months - 5 Years$944,711.0

1,000,000

0%
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2018

2017

$790,604.0

2018
Q3

Source: Dealogic0< 5 Years

5 - 7 Years

7+ - 10 Years

10+ Years
Source: Bloomberg

Page | 11

4.7. Domestic CNY All: Issuance by Sector

4.8. Domestic CNY All: Outstanding by Sector
Domestic CNY All: Total Outstanding By Sector
2018:Q3

Finance
Construction/Building
Real Estate/Property
Utility & Energy
Transportation
Holding Companies
Mining
Metal & SteelFood & Beverage
Oil & Gas
Computers & Electronics
Auto/Truck
RetailInsurance
Chemicals
Healthcare
Machinery
Telecommunications
Professional Services
Consumer Products
AgribusinessTextileLeisure & Recreation
DefenseForestry & Paper
Publishing$52,312.82$15,788.51$14,984.90$12,986.08$7,597.67$6,605.29$6,233.78$5,304.31$2,464.74$1,835.38$1,732.02$1,632.77$1,349.13$1,316.28$1,144.13$944.37$907.49$847.25$759.47$722.53$645.54$512.37$371.38$365.76$151.89$29.340

10,00020,000Government$6,975,468.8

Financials$2,897,755.6

Industrials$959,710.3$ millions

Real Estate$325,956.5

Energy$236,773.7

Utilities$222,350.5

Materials$206,514.2

Consumer Discretionary$158,560.9

Consumer Staples$40,664.7

Technology$37,518.4

Health Care

$27,720.0

Communications$17,244.8

Other

$72.6
0

30,00040,00050,00060,000Source: Dealogic$ millions

Domestic CNY All: Total Issuance by Sector
2018:Q3

1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000
Source: Bloomberg

Page | 12

China – CNH
Key trends in offshore renminbi (CNH) and the dim sum bond markets
The pace of offshore issuance slowed even further in the third quarter from the second quarter; an equivalentof USD 2.0bn in CNH bonds were issued, a decline of 36.2% qoq but an increase of 7.7% yoy. In terms of tenor,transactions with tenors of 5-years or less accounted for 83.7% of third quarter issuance. HG deals rated AAtotaling USD 502.5mn had the highest rating share among deals (25.7%). In terms of sector, real estate was
the largest issuer in 3Q’18 (USD 1.1bn), followed by finance (USD 759.0bn) and computers (USD 87.4mn). Yearto date, offshore issuance totaled USD 8.9bn, a decline of 48.6% from the first three quarters of 2017.
Looking ahead, there is some hope that there could be a revival of dim sum bond issuance, on a combinationof factors:a) The HK authorities have provided incentives for certified green bond issuance out of the city – As aconsequence, there could be a flurry of “green” dim sum issuance, especially those connected to the“Greater Bay Area” and the BRI initiatives.
b) As onshore debt financing gets more expensive, or the USD-denominated debt markets prove
inaccessible, Chinese issuers could be tempted to tap the “dim sum” bond markets in HK.
CNH Deposit Base by Location Amt (USD bn)
Hong Kong
90.9
Singapore
20.3
Taiwan46.8
Korea, Republic of
1.5
Luxembourg
9.8
United Kingdom
10.3
France3.2

As of
Aug-18Jun-18
Jul-18Aug-18Aug-15Jun-18Dec-15

CNH deposits rose slightly in Hong Kong, South Korea, andTaiwan in the most recent data ending the third quarter
2018, although total deposits remain relatively low overall.
The total of dim sum bonds outstanding stood at USD
54.2bn at the end of the third quarter, a small increase of
0.1% qoq but a decline of 6.9% yoy.

Sources: HKMA (Hong Kong), MAS (Singpore), Central Bank ofRepublic of China (Taiwan), Bank of Korea (Korea), Luxembourg for
Finance (Luxembourg), Bank of England (UK), PWC (France);
Exchange Rate: CNH 6.687 = USD 1.0, GBP 1.30 = USD 1.0

Page | 13

5.1. CNH All: Total CNH Issuance

5.2. CNH All: Total Outstanding

CNH All: Total CNH Issuance2010 - 2018:Q3
60,000

CNH All: Total Outstanding
2013:Q3 - 2018:Q3$ millions$ millions

120,000

50,000100,000

40,00080,00030,00060,00020,00040,00010,00020,000

0
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018
Q3

0
2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 2017Q3 2018Q1 2018Q3

Source: Dealogic

5.3. CNH All: Issuance by Rating

Source: Bloomberg

5.4. CNH All: Outstanding by Rating
CNH All: Outstanding By Rating
2018:Q3

CNH All: Issuance by Rating2010 - 2018:Q3
NR$45,980.1

100%
90%
80%

B
BBB
AA

BBB+

$326.7

BBB-$100.2BBB$164.2

60%

BB-

$41.2

50%

BB

40%

B-

30%

AA-

$920.1

AA$834.2

A-$803.9

70%

20%
10%

$1,943.1$246.4$ millions

Not rated
BB
A
AAA

0%
YTD
2010

2011

2012

2013

2014

2015

2016

2017

2017

2018

2018
Q3

A

$2,804.50

5,000

10,00015,00020,00025,00030,00035,00040,000Source: Dealogic

5.5. CNH All: Issuance by Tenor

45,00050,000Source: Bloomberg

5.6. CNH All: Outstanding by Remaining Tenor
CNH All: Outstanding By Remaining Tenor
2018:Q3

CNH All: Issuance by Tenor
2010 - 2018:Q3
100%

30,000$ millions

90%
80%

25,000$27,235.0

70%

50%

Other

40%

10+ Years30%

7 - 10 Years

20%

5 - 7 Years

10%$19,381.2

20,00060%

15,00010,00013 Months - 5 Years

5,000

YTD
2010

2011

2012

2013

2014

2015

2016

2017

2018

2017

2018
Q3

Source: Dealogic$3,267.7$2,427.9$1,852.7

5 - 7 Years

7 - 10 Years

0%0
Short Term

13 Months - 5
Years

10+ Years
Source: Bloomberg

Page | 14

5.7. CNH All: Issuance by Sector

5.8. CNH All: Outstanding by Sector

CNH All: Total Issuance by Sector
2018:Q3

CNH All: Total Outstanding By Sector
2018:Q3
Financials$1,110.1$26,884.8

Government$21,265.5

Real Estate$2,089.5

Industrials
Finance$1,302.4

Utilities$759.0$1,218.6

Computers & Electronics$ millions

Technology

$87.4

0

200

400

600

800

1,000

1,200

Source: Dealogic$644.7

Energy$279.8Consumer Discretionary$248.1

Consumer Staples$ millions

Real Estate/Property$231.00

5,000

10,00015,00020,00025,00030,000Source: Bloomberg

Page | 15

Spreads, Credit & Total Return
Relative Value and returns (Asia ex-Japan, Australia & New Zealand G3)
Asian HG bond spreads traded wider in 3Q’18 from the second quarter (147 bps vs. 138 bps): US and European
HG bonds traded similarly, at 119 bps and 116 bps respectively. This was slightly wider than the second
quarter: for 2Q’18 the US averaged 118 bps and Europe averaged 103 bps. US HY spreads were broadly
unchanged at 346 bps in 3Q’18 relative to 2Q’18, while European HY spreads widened by 30 bps to 357 bps
from 327 bps over the same period. Asian HY spreads underperformed significantly, widening to 560 bps at
the end of 3Q’18 from 460 bps at the end of 2Q’18.
The recent volatility in global markets could continue to keep Asian credit spreads on the defensive for the
rest of 2018. Longer-term, going into 2019, a great deal will hinge on how quickly markets stabilize – in any
event, the Asian credit markets may well be the first to normalize, given the recent underperformance,
particularly in the HY space. Moreover, on a relative value (RV) basis, Asia continues to offer value comparedto the US and Europe, which is yet another reason to remain constructive on Asia.

Page | 16

6.1. Global HG Corporate Spreads

6.2. Global HY Corporate Spreads

Global HG Corporate Spreads
Jul. 2010 - Sep. 2018
350

Global HY Corporate Spreads
Jul. 2010 - Sep. 2018
1,200

Basis Points

Basis Points

US

US

300

Asia

1,000

Asia

EuropeEurope

250

800
200
600

150
400
100
200

50
0
Jul-10Jul-11

Jul-12

Jul-13

Jul-14Jul-15

Jul-16

Jul-170
Jul-10Jul-18

Jul-11

Jul-12

Jul-13

Jul-14Jul-15

Jul-16

Source: ICE BofAML

6.3. CNH HG Yield Curve

Jul-186.4. CNH HY Yield Curve
CNH HY Yield Curve

CNH HG Yield Curve
4.9

Jul-17

Source: ICE BofAML

18.0

Percent

Percent

16.0

4.7

14.0
4.5

12.0
4.3

10.0

4.1

8.0

6.0
3.9

9/30/2017

9/30/2017

4.0

6/30/2018

3.7

6/30/2018
2.0

9/30/2018
3.5

9/30/2018

0.0
0

5

10

15

20

25

30

35

0

1

2

3

4

5

Source: Bloomberg

6.5. CNH NR Yield Curve

6.6. Global Returns, Quarter-End

CNH NR Yield Curve

Total Return (Global)
2018:Q3

Percent

Nikkei 225
S&P
MSCI EM LatAm
BAML Asian Dollar HY
BAML Asian Dollar HY Corporate
MSCI EM Europe
BAML US High Yield Index
BAML Euro High Yield
BAML Asian Dollar Index
BAML US Corporate Index
BAML Australia Corporate
BAML Asian Dollar IG
BAML Asian Dollar HG Corporate
Australian All-Ordinaries
Euro Stoxx 50
BAML Euro Corporate
BAML Japan Corporate
BAML Global Credit
FTSE 100MSCI Emerging Markets
MSCI EM EEMEAMSXI EM Asia

4.4
4.2
4.0
3.8
3.6
3.4

9/30/2017

6/30/2018
3.2

9/30/2018

3.0
0

2

4

6

8

10

12

14

16

Source: Bloomberg

Percent

4.6

6

Source: Bloomberg

-4

-2

0

2

4

6

8

10

Source: S&P, BAML,MSCIPage | 17

6.7. Global Returns, 2018

6.8. Asia Upgrades / Downgrades ex DM Asia
Standard & Poor's Asia Upgrades/Downgrades ex DM Asia
2012 - 2018:Q3

Total Return (Global)
2018 YTD
30

Nikkei 225
S&P
MSCI EM LatAm
BAML Asian Dollar HY
BAML Asian Dollar HY Corporate
MSCI EM Europe
BAML US High Yield Index
BAML Euro High Yield
BAML Asian Dollar Index
BAML US Corporate Index
BAML Australia Corporate
BAML Asian Dollar IG
BAML Asian Dollar HG Corporate
Australian All-Ordinaries
Euro Stoxx 50
BAML Euro Corporate
BAML Japan Corporate
BAML Global Credit
FTSE 100MSCI Emerging Markets
MSCI EM EEMEAMSXI EM Asia

Upgrades25

Downgrades
20

15

Percent

10

5

0
FY
-15

-10

-5

0

5

10

15

FY

FY

Q1

Q2

2012 2013 2014

Q3

Q4

2015

Q1

Q2

Q3

2016

Source: S&P, BAML,
MSCI

Q4

Q1

Q2

Q3

Q4

2017

Q1

Q2

Q3

2018

Source: Standard & Poor's

6.9. Asia Upgrades / Downgrades, DM Asia
Standard & Poor's Asia Upgrades/Downgrades, DM Asia Only2012 - 2018:Q3
30

Upgrades25

Downgrades
20

15

10

5

0
FY

FY

FY

2012 2013 2014

Q1

Q2

Q3

2015

Q4

Q1

Q2

Q3

2016

Q4

Q1

Q2

Q3

2017

Q4

Q1

Q2

Q3

2018

Source: Standard & Poor's

6.10. Asian Upgrades & Downgrades, Standard & Poor's, Third Quarter 2018
UpgradesHitachi Ltd.
PT Perusahaan Listrik Negara (Persero) (Republic of Indonesia)
EMECO Holdings Ltd.
Bright Food (Group) Co. Ltd.
Health and Happiness (H&H) International Holdings Ltd.
ITOCHU Corp.
Christchurch International Airport Ltd.
New Energy Group Ltd.

CountryJapan
Indonesia
Australia
China
China
Japan
New ZealandAustraliaDate
8/7/2018
8/20/2018
9/11/2018
7/18/2018
9/10/2018
7/13/20189/18/2018
9/20/2018

Rating
A
BBBB
BBB
BB+
A
AA-

Downgrades
China South City Holdings Limited
Tianjin Binhai New Area Construction & Investment Group Co. Ltd.
Tata Motors Ltd.
Beijing Automotive Group Co. Ltd.
Zhenjiang Transportation Industry Group Co. Ltd.
Wuxi Construction and Development Investment Co. Ltd.
China Huarong Asset Management Co. Ltd.
Yida China Holdings Ltd.
Guorui Properties Ltd.
Chongqing Nan'an Urban Construction & Development (Group) Co. Ltd.
Zhongrong Xinda Group Co. Ltd.
Qinghai Provincial Investment Group Co. Ltd.
Tianjin Infrastructure Construction & Investment Group Co. Ltd

Country
Hong Kong
China
India
China
China
China
China
China
China
China
Hong Kong
China
China

Date
7/30/2018
9/11/2018
7/26/2018
8/30/2018
9/11/2018
9/11/20188/28/2018
8/21/2018
9/7/2018
9/11/2018
7/13/2018
9/6/2018
9/11/2018

Rating
BBBB
BB
BBB+
BBBBB
BBB+
BBBBB
B
B+
BBB+

Page | 18

Summary of the Methodologies Adopted for this Report
1. 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” issuances 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 rank eligibility
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 rank eligible andtherefore 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 issuances 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 other criteria 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 to overlap
between rank ineligible deals and those deals with no rating; a close analysis of the data reveals that thefigures for data excluding “rank ineligible” deals and the figures for data excluding data rated N.A. in
Bloomberg are similar.

Page | 19

1.1., 1.3, 1.5., 1.7., 1.9., 1.11., 1.13., 1.15., 1.17., 1.18.
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.
1.2., 1.4., 1.6., 1.8., 1.10., 1.12.
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 a bondwith a single rating assigned by the four rating agencies, whereas “NA” denotes a bond with no rating fromany of the four.
Outstanding by tenor are based on current tenor as quarter-end. “Other” includes those bonds with no listed
maturity date and perpetuals.
2. LCY Asia ex Developed Market Asia (Japan, Australia and New Zealand)
2.1. - 2.4.
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.
3. All Asia
3.1. – 3.9.
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.
4. 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, mediumterm 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.

Page | 20

4.1. – 4.8.
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.
5. 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, mediumterm 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 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.
5.1. – 5.8.
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.
6. Spreads, Credit Quality & Total Return6.1. – 6.2. Global Corporate Spreads
High grade and high yield US and European corporate spreads are sourced from Bank of America-Merrill Lynch(ICE BofAML) indices. Spreads are over government debt.
US high grade spreads are sourced from ICE BofAML’s US Corporate Index (C0A0) and tracks the performanceof 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 thosewith 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 whichcase 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 those with alternative
coupon satisfaction mechanisms, are also included in the index. Securities issued or marketed primarily toretail investors, equity-linked securities, securities in legal default, hybrid securitized corporates, Eurodollar

Page | 21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 ICE BofAML’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 fromthe 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 a floating ratesecurity. Contingent capital securities are included in the index provided they do not have an automaticcommon 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 withprincipal write-down triggers. Hybrid capital securities qualify for the index, including those potentiallyconverting into preference shares, those with both cumulative and non-cumulative coupon deferralprovisions, 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 retailinvestments do not qualify for inclusion in the index.
US high yield spreads are sourced from ICE BofAML’s US High Yield Index (H0A0) and tracks the performanceof 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, theUS, 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 afixed to a floating rate security. Contingent capital securities, including those with automatic principal writedown 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 with both
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 retail investors, equitylinked 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 ICE BofAML’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 anaverage 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 scheduleand 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 the date thebond 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 with triggers
activated by a regulatory authority, including conversions into equity, qualify for inclusion. Also qualifying forinclusion 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 andnon-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 arethose 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.
6.3. – 6.5. 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 fittedusing Nelson-Siegel regression on mid-yield to maturity of underlying bonds.
6.6. – 6.7. 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,
6.10. – 6.10. 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.

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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 Report becomesoutdated 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 and estimatesby the individual sources may differ from one another, estimates for similar types of data could vary within
the Report.

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CreditASIFMA
Vijay Chander, Executive Director, Fixed Income
Timothee Bihet, Associate
SIFMA
Kyle Brandon, Managing Director, Director of Research
Sharon Sung, Vice President, Research

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