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Bringing the Money Back Home

The fact that private sector borrowers are already tapping international investors by issuing bonds offshore proves that international investors have the interest and appetite.
It also proves that the local currency markets' other shortcomings are being addressed externally to allow these transactions to take place. Markets and market makers exist for these private sector bond issues, hedging and funding is available because of the use of U.S. dollars and euros, and the infrastructure for the provision of timely information is also in place.

The challenge for local currency markets is to bring these transactions back onshore. A viable, domestic, private sector bond market will help reduce the heavy reliance on banks evident in the developing markets and should, in time, also satisfy the funding needs of other private sector borrowers that aren't big enough to attract international investors.

Moreover, opening developing markets to international issuers and investors will enable greater integration within the region, which can only benefit all as Asia-Pacific is increasingly seen as an important financial market along with Europe and North America.

Concluded.

* Contributed by: -
Philip Bayley is Primary Credit Analyst with Standard & Poor's, Melbourne.