Asia-Pacific banks' debt issuance plunged to the lowest monthly level for 2024 in September following a busy few months.
Banks in Asia-Pacific issued $15.03 billion in debt securities in September, compared to $13.03 billion a year ago, according to data compiled by S&P Global Market Intelligence on a best-efforts basis. The September aggregate, while higher than that of September 2023, was down from the month before, when banks' debt issuance volumes grew around 18% year over year.
Debt issuance in September was smaller than the prior two months because "banks had front-loaded bond issuance in August in preparation for the redemption/maturity of existing bonds in September," Iris Tan, senior equity analyst for Morningstar, said in an email.
"According to statistics, banks' financial banks entered maturity peak in August and September, resulting in larger issuance in July and August," Tan said. Asia-Pacific banks raised an aggregate $18.30 billion in August and $22.13 billion in July.
Asia-Pacific banks' debt issuances in the first nine months of 2024 surged past the levels seen in 2023. Between January and September, they raised $214.35 billion via debt securities, compared to $162.66 billion in the same period a year ago.
Regional breakdown
Together, Australian and Japanese lenders issued $8.60 billion in debt securities in September, accounting for more than half of Asia-Pacific banks' debt issuance for the month, partially offsetting the absence of major mainland Chinese banks from the capital market.
Three Australian banks — Commonwealth Bank of Australia, Macquarie Bank Ltd. and ANZ Group Holdings Ltd. — issued $5.09 billion of debt securities in September, while Japanese lenders, including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Trust Bank Ltd., raised a total of $3.51 billion, the data showed.
Major mainland Chinese banks, which are some of the biggest issuers of debt securities, were absent from capital markets in September, dragging the aggregate volumes. Just two lenders, China Bohai Bank Co. Ltd. and Shengjing Bank Co. Ltd., issued debt securities to raise a total of $2.40 billion.
Major mainland Chinese banks may not have to rely on debt issuance as they will receive a capital injection from the government, as previously announced, Yusuke Miura, a senior economist at NLI Research Institute, who covers the Chinese economy, said in an email.
Miura said the People's Bank of China's series of rate cuts "would make it easier for banks, particularly regional banks, to issue debt like perpetual bonds to increase their capital ratios."
