ICMA has published a report on the state and evolution of the Asia-Pacific cross border corporate bond secondary market. While the report is primarily focused on G3 (USD, EUR, GBP) denominated bonds of non-financial and financial corporate issuers, as defined by having the issuer country of risk within the APAC region, it also explores the ongoing internationalisation of local currency markets, in particular the Chinese market.
A common topic raised by both sell-side and buy-side rms is the lack of development in underlying repo and securities lending markets for APAC G3 credit. To a large extent this seems to limit secondary market growth and activity. Participants explain that many regional investors do not lend their holdings back into the market, and that supply is largely contingent on hedge funds and international real money investors. What supply there is tends to be routed via the London credit repo desks of international banks, with cost and stability being a major concern for borrowers.11 Market-makers therefore often struggle to nd repo liquidity to allow them to short-sell, which restricts offer-side liquidity.
The full report is available here.