China continues to be a dominant player in Asia’s bond markets, accounting for the majority of issuance activity in the G3 space. The country also leads the region in green bond issuance. Its regulators have issued special green bond guidelines for listed companies, introducing a supervisory scheme broadly modelled after the widely-accepted Climate Bonds Standard and Certification. China’s Belt and Road projects remain a priority for the Chinese government, with the bond market seen as a source of financing for some of these projects. Panda bonds, meanwhile, are on the rebound with more sovereign issuance in the pipeline. At the same time, cash-rich Chinese investors have underpinned the growth of the Reg S market, one of the most defining trends in the Asian capital market in recent years. It means that Asian issuers are no longer dependent on US institutions when raising dollar bonds.
But there are headwinds in the horizon. Due to tightening liquidity, China is likely to see the first default in local government funding vehicle (LGFV) bonds. LGFVs have become regular issuers in the US dollar bond market. With Asia’s burgeoning savings, its growing affluence, coupled with a generally low interest rate environment, the region is a key market for global issuers and investors. China, in particular, is becoming an important part of global investment mandates. The launch of the investment scheme Bond Connect paves the way for global investors to easily access a largely untapped Chinese onshore market. The entry of global rating agencies into China is expected to promote improved credit risk assessment, which in turn, will provide global investors a better understanding of Chinese issuers’ profile.
The Asian Bond Markets Summit is the definitive fixed income event in Asia that draws the largest participation of issuers and institutional investors. Organized in association with the Asian Development Bank (ADB), the summit is part of the ADB’s Asian Bond Markets Initiative that aims to deepen the development of Asian bond markets.
09:00 Welcome remarks
09:10 Morning keynote address
09:30 Panel one: Ushering an era of balanced growth
Underpinned by a strong government support, China’s dominance in Asia’s bond markets is set to continue. Developments in the green bond space, Belt and Road initiatives and the Panda bond market will further expand China’s capital markets. But as the country embarks on its journey towards social and economic stability, achieving balance growth becomes the priority. Deleveraging will continue as the country battles its burgeoning debt and issuers are faced with tightening liquidity.
10:10 Networking and coffee
10:40 Panel two: Bond Connect – a year on
China continues to further open its domestic market through the Bond Connect. Foreign investor participation is on the rise, accounting for a third of fund inflows for the past year. Recent talk on a similar scheme between UK and China are adding to the excitement. Yet challenges surrounding trading, regulations and tax are yet to be addressed.
11:20 Panel: Green bonds – China and beyond
China’s green bond market continues to expand. The release of guidelines for listed companies on green bond issuance and verification as well as well as recent talk of a green bond channel between China and Europe are seen as key steps to further internationalize the market. Global investor participation, however, have been stifled by concerns surrounding criteria for green bonds as well as varying reporting standards. How can Chinese green bonds become more mainstream?
12:00 In conversation: Greening the Belt and Road
China’s Belt and Road initiative continues to be a top state agenda and the international capital markets is expected to play a major role in funding projects along the route. As China embraces the green agenda, the use of green finance is actively being promoted to support infrastructure projects along the Belt and Road corridors. Will the Belt and Road initiative pave the way for China’s green finance leadership?
14:00 Afternoon keynote address
14:30 Panel: Pandas on the rebound?
More than a decade after its introduction into the market, Panda bonds’ potential to further internationalize the renminbi is yet to achieve its goal. Panda bonds are mostly issued by Chinese companies incorporated overseas. Foreign issuers, who wish to tap the onshore market, have shied away as concerns on regulatory policies on approvals as well as use of proceeds remain unclear. As China introduces a more relaxed regulatory policy, will Panda bond issuance soar?
15:10 In conversation: The internationalization of China’s credit rating industry
The China credit rating industry has long been besieged by issues surrounding accuracy, transparency and methodology. As domestic and foreign investors increasingly demand for meaningful credit evaluations, China is making moves to strengthen its credit rating system. The entry of foreign rating agencies along with China’s bid to attract more foreign investment into its onshore markets will push Chinese players to improve their game and meet international standards. Yet, more has to be done for Chinese rating agencies to achieve the confidence bestowed by global investors on their US counterparts.
15:30 Networking and coffee
16:00 Panel: Tapping the Asian Reg S market
Asia's burgeoning wealth, underpinned by the rising affluence of Chinese investors, paved the way for the explosive growth of the Reg S market in the region. Asian issuers, who traditionally rely on the US for funding, are now turning to Asian investors. But will this trend last?
16:40 The future of LGFVs
China’s local government spending has been a major concern for the central government. Robust issuance of local government financing vehicles (LGFVs) bonds in recent years have contributed to the country’s burgeoning debt. But as China’s deleveraging campaign continues, LGFVs will likely be impacted. Tightening liquidity, closer scrutiny of local government spending and talks of removal of guarantees will hit LGFVs bonds and the risk of a default is on the table. How will an LGFV bond default reshape China’s bond market.
17:20 Closing remarks
16:30 Networking and cocktails
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