Data from Dealogic show that while the initial public offering market in the first half of this year was largely flat compared with the first half of 2010, the bond market in Asia (ex-Japan) has been booming.
Amounts raised by dollar-denominated and local currency bonds during the first six months of the year have both hit new highs. The surge in dollardenominated debt, which rose from about $35bn to $52.5bn, was particularly pronounced, as the chart below shows. Local currency debt hasn?t done too poorly either, with the amount raised up 7 per cent from $170.8bn to $183.2bn.
Not surprisingly, China has been a big driver of growth in both categories. Chinese companies led the pack in dollar issuance with $16.5bn raised since January, compared with $15.5bn raised in the whole of 2010. Meanwhile, Agricultural Bank of China and Bank of China are among those that have raised a total of $94.5bn in renminbi-denominated bonds so far this year.
Borrowers? and investors? enthusiasm for the debt market hasn?t quite extended into the equity market, however.
In spite of some high-profile listings, such as Hutchison Port?s $5.4bn IPO in March, the volume and value of equity issues were flat between the first half of 2010 and first half of 2011.
To be fair, these figures don?t include the recent $1.25bn listing by Samsonite and Prada?s $2.14bn float last week. But the divergence in growth between the amount raised in the debt and equity markets dovetails with the broader emerging markets trend of investors shifting from equities into bonds. As beyondbrics reported on Friday, EM bond funds notched up their 13th straight week of inflows last week, while EM equity funds had their third week of outflows.
The choppy stock market has clearly got companies to think twice before pursuing a listing and investors to think twice before plunking down their cash.
On Friday, Chinese lender China Everbright said it had postponed the launch of order-taking for its $6bn HK listing and Chinese sportswear maker Hosa International scrapped a $211m IPO in the city.
This comes after Carlyle pulled the plug on listing Moncler in Hong Kong this month and Resourcehouse, the coal and iron ore vehicle of Australian real estate baron Clive Palmer, shelved a planned $3.6bn IPO in Hong Kong after failing to attract enough demand.
But don?t be surprised if some of these companies come back to do their fundraising via the debt market. Bonds are still hot even if IPOs are not.
? The Financial Times Limited 2011