Japanese companies have become the new leaders in the Asia-Pacific offshore bond market after recording the highest issuance volume in history in the second quarter of this year.
For the first time in years, Japan has overtaken China, which previously dominated the market.
During the three months ended June 30, companies in the Asia-Pacific region issued bonds in US dollars and euros worth about US$154 billion.
Of that amount, almost 40% were issued by Japanese companies. Among the active bond issuers were Sony and Panasonic, which used the financing to finance company acquisitions and investments in artificial intelligence (AI) technology.
The increase was driven by market conditions in Japan, which saw local interest rates rise.
This situation made borrowing in foreign currencies such as US dollars cheaper than obtaining financing domestically.
Once the funds were raised, companies could convert them back into yen at a lower cost.
Meanwhile, China's position in the offshore bond market has weakened due to the property sector downturn and prolonged economic stress.
Australia is now in second place in terms of bond issuance, while China has fallen to third place.
At the same time, the euro bond market has also grown rapidly as more Asian companies choose to obtain financing in the currency as a way to reduce their dependence on the US dollar.
Analysts expect bond issuance activity in the Asia Pacific region to continue to strengthen in the second half of this year.
While investors still face risks such as inflation and geopolitical tensions, demand for high-quality bonds remains buoyant.
The changes indicate that the landscape of Asian bond markets is changing, with Japan now emerging as a major player replacing China's dominance.
