Asian G3 currency bonds and offshore RMB bonds perform actively, STANCHART expects issuance volume to remain unchanged next year

Since the beginning of this year, the primary market for G3 currency (US dollar, euro, and Japanese yen) bonds in the Asia region (excluding Japan) has been active. Eric Wu, Head of Debt Capital Markets for Greater China and North Asia at Standard Chartered, stated in a recent interview that as of November 13 this year, the issuance of G3 currency bonds in the region has increased by 24.2% year-on-year to USD 200.56 billion, surpassing last year's total issuance, with an expected annual growth rate of about 25%. In terms of offshore RMB bonds (including certificates of deposit), he noted that after a decline in issuance in the first quarter, there was a significant rebound starting in the second quarter, leading to a year-on-year increase of 13% in the issuance volume for the first ten and a half months to RMB 667.725 billion. Significant Rebound in Offshore RMB Bond Issuance After the First Quarter Eric Wu believes that the performance of offshore RMB bond issuance this year needs to be viewed on a quarterly basis to better understand its trend, as the situation was quite difficult at the beginning of the year. At that time, U.S. President Trump initiated a tariff war, creating uncertainty in the RMB exchange rate, which resulted in poor performance for RMB bond issuance in the first quarter, with a total issuance of RMB 118.348 billion, down 20.9% year-on-year. However, the issuance volume in subsequent quarters has significantly recovered, offsetting the decline in the first quarter and even bringing growth, resulting in a year-on-year increase of 13% in issuance volume from the beginning of the year to November 13, with the growth momentum expected to continue for the entire year. In the second quarter, the issuance volume of offshore RMB bonds was RMB 204.587 billion, a significant rebound of 33% year-on-year; in the third quarter, it was RMB 255.086 billion, an increase of 17.6%. Increasing Number of Institutions Issuing Long-term Offshore RMB Bonds He pointed out that the current issuers of offshore RMB bonds have become more diversified, although Chinese issuers still dominate. This year, many state-owned enterprises and central enterprises have issued offshore RMB bonds, and there are also numerous Chinese issuers issuing offshore RMB bonds for refinancing to repay maturing US dollar bonds, as RMB interest rates are relatively low. At the same time, many foreign issuers are issuing offshore RMB bonds based on their investments in the mainland to meet their RMB funding needs. Another notable phenomenon is that an increasing number of institutions are issuing long-term offshore RMB bonds with maturities of 10 years or more. As of November 13 this year, the issuance volume of G3 currency bonds in the Asia region not only recorded an increase of over 20% year-on-year but also exceeded last year's total by USD 24.481 billion or nearly 14%. He indicated that there are still many G3 currency bond issuances being arranged before the end of the year, so he believes that the total issuance volume for the year could increase by about 25%. Looking ahead to next year, Eric Wu expects that the issuance volume of G3 currency and offshore RMB bonds will continue to rise, with offshore RMB bond issuance benefiting from the internationalization of the RMB, active promotion by regulatory authorities in both Hong Kong and the mainland, market demand, and numerous successful issuance examples attracting more issuers to participate. Additionally, the interest rate reduction cycle will be favorable for US dollar bond issuance