With more than a quarter of 2014 remaining, Asian issuers have already sold more bonds in dollars, euros and yen this year than ever before, taking advantage of easy monetary policies to lock in financing at low fixed rates.

With more than a quarter of 2014 remaining, Asian issuers have already sold more bonds in dollars, euros and yen this year than ever before, taking advantage of easy monetary policies to lock in financing at low fixed rates.

Asian issuers, excluding Japan and Australasia, have raised US$143.6bn, with US$1bn of new issues on Thursday night taking the total comfortably past last year's US$142.8bn record, according to Thomson Reuters data.

International bond sales from Asia have now hit a record for three years running, and have doubled since 2009. Volumes for the following years are likely to remain high as earlier deals mature and are refinanced with new bonds, market participants said.

"The growth of Asia's credit markets continues apace, helping underpin the region's economic expansion", Alexi Chan, head of debt capital markets for Asia Pacific at HSBC, said by email. "We are seeing unprecedented levels of global investor liquidity focused on Asia."

Investors with cash to invest are seeking out Asia as geopolitical tensions in Europe and the Middle East have made them wary of investing in those regions. Investors who fled risky assets in the US earlier this year also are looking for more generous returns elsewhere.

"Asia has been attracting steady inflow as a relatively stable destination and Asian credits still offer a yield pick-up [compared to similar credits in the US]," said a portfolio manager from a major US hedge fund.

MORE TO COME

Bankers say bond sales are heating up again after a quiet summer, so the final total for 2014 could far exceed last year's. Deutsche Bank, for example, expects Asian companies will sell another US$25bn of bonds in the major G3 currencies this year.

"[Financial institutions] will be the largest contributor for the rest of the year, and we are going to see a healthy clip of high-yield corporate issuances from Indonesia, India and China. Also there is a well-defined pipeline from South Korea IG," said Herman van den Wall Bake, head of fixed income capital markets for Asia at Deutsche Bank.

The action started right away in September with US$4.74bn sold in the first week alone. Expectations are new issue volume will remain brisk this month as some market participants predict the monthly total alone will exceed US$20bn.

BASEL BONDS

Bank capital, especially Basel III-qualifying offerings from China, is likely to account for the bulk of the new issues for the rest of the year.

Bank of China and ICBC are preparing to sell a combined US$12.2bn in Basel III-compliant Additional Tier 1 securities in the offshore market. Fitch Ratings expects US$20bn in AT1 and Tier 2 capital to be issued by the big five Chinese banks by the end of the year, both onshore and offshore.

Indian banks are also expected to tap the offshore market, but for senior bonds instead of Basel III-eligible capital. Indian Bank and Allahabad Bank are planning to raise about US$500m each while UCO Bank has also hired banks for a Reg S-only deal.

CORPORATE PIPELINE

In Korea, many of the frequent issuers are likely to tap the market again before the end of the year, a Singapore-based DCM banker said. The growing pipeline includes Korea Hydro & Nuclear Power, Hana Bank, Korea Expressway and Korea Western Power.

High-yield borrowers, which have been relatively quiet this year, are also likely to fill their funding requirements in the following months while interest rates remain conducive.

Investment-grade issuers, meanwhile, may take a breather after a hectic financing schedule earlier this year.

Excluding financial institutions, Asian corporations have already raised US$28.8bn more in G3 bonds this year than last year at this time (US$114.8bn).

"We don't see imminent refinancing needs from IG corporates," Deutsche's Bake said. "Many of them are likely to kick the ball forward to the first quarter of next year in order to defer negative carry closer to their actual refinancing needs. We believe most of the IG corporate funding this year is behind us."