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APAC Investors See Broadly Favourable Financing Conditions in 2025

Mon 27 Jan, 2025 - 8:05 PM ET

ֳ-Hong Kong-27 January 2025: Asia-Pacific (APAC) investors expect US dollar (USD) debt issuance and market appetite in 2025 to remain broadly similar to 2024, a robust year for issuance by historical standards, in most of the region’s markets, according to a recent survey by ֳ. We view this positive indicator of appetite for USD debt as a sign that financing conditions are likely to be a supportive factor for most APAC issuers’ credit profiles in the near term, though Chinese issuers continue to face more mixed investor perceptions.

Between November and December 2024 ֳ surveyed 128 investors based in APAC and active in the fixed-income market. They were most optimistic about the prospect of higher USD issuance and market appetite in India and Australia for 2025. Investors expected issuance and market appetite in many other regional markets, such as Japan, Korea, Indonesia, Vietnam and Thailand, to be similar to last year. ֳ believes debt financing conditions will generally be supported by robust economic growth in APAC.



Beyond the broad optimism about India and Australia, respondents were also relatively upbeat towards prospects for USD issuance and market appetite for Indonesian corporates and infrastructure, Japanese corporates and financial institutions, and ESG-labelled bonds.

Investor attitudes towards China were nuanced, considering relative values and market technical factors. The share of respondents stating that they were continuing to invest and were cautiously optimistic on certain sectors, at 28%, was equal to that saying that they were hesitant, with only small amounts of activity. However, the proportion of bearish investors (15%) was significantly higher than the proportion of actively investing bulls (5%).

Relatively high shares of respondents expected lower USD debt issuance and market appetite, compared with 2024, for Chinese LGFVs and corporates in 2025. This may partly reflect the reduced incentive for Chinese issuers to seek offshore financing as onshore financing costs have fallen relative to those offshore, as well as lower corporate investment appetite.



The responses may also be coloured by investors’ caution over China’s near-term economic prospects. Survey respondents mostly reserved judgement on the success of the Chinese government’s efforts to revive growth, with 63% agreeing that the effectiveness of stimulus efforts to restore confidence and spur recovery had yet to be assessed. However, almost one-third of respondents were fundamentally bearish, compared with just 6% who described themselves as optimistic on growth. Chinese respondents were more likely to be optimistic and less likely to be bearish than other respondents, but the share reserving judgement on the effectiveness of stimulus efforts (64%) was similar. Among the non-optimistic respondents, both Chinese and non-Chinese investors agreed that domestic factors, including consumer confidence and the poor and slow recovery of the property sector, were more important than geopolitical ones.

Investor attitudes towards private credit remain cautious compared with other parts of the world. Only 25% of respondents to the ֳ survey indicated that they had already invested in private credit markets in APAC, and only a further 19% said they may invest in them in the near future. One quarter had not invested in APAC private credit and agreed that it was still early days for the sector, with higher risks, such as lack of transparency and poorer credit quality compared to public markets.

Contacts:

Duncan Innes-Ker
Senior Director, Risk
Credit Commentary & Research (Including ֳ Wire)
+852 2263 9993

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Media Relations: Leslie Tan, Singapore, Tel: +65 6796 7234, Email: leslie.tan@thefitchgroup.com
Peter Hoflich, Singapore, Tel: +65 6796 7229, Email: peter.hoflich@thefitchgroup.com
Vivian Kam, Hong Kong, Tel: +852 2263 9612, Email: vivian.kam@thefitchgroup.com

The above article originally appeared as a post on the ֳ Wire credit market commentary page. The original article can be accessed at . All opinions expressed are those of ֳ.


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