Asia's bond markets shake off war angst with record local issuance

• Hong Kong dollar bond issuance hit an all-time high for a year's start, with three deals in one week raising nearly HK$42 billion ($5.4 billion), including MTR Corp's HK$18.9 billion offering that drew orders nearly 4 times the deal size
• Singapore dollar bond sales reached $5.56 billion, the highest level in 12 years, with new investor classes emerging including Hong Kong insurers and London-based buyers entering the market
• Markets paused briefly after Middle East hostilities escalated in early March but rebounded quickly following a U.S.-Iran ceasefire on April 8, with investors remaining selective and favoring high-quality investment-grade issuers

Asia Bond Markets Hit Record Issuance Despite Middle East Conflict

Asian local currency bond markets have reached record levels in 2026, demonstrating resilience amid Middle East war tensions as investors diversify away from U.S. dollar debt.

Key Figures

Hong Kong dollar bond issuance surged nearly 17% to $14.8 billion year-to-date, an all-time high for this period. Australian dollar bonds jumped almost 30% to A$143 billion, also a record. Singapore dollar issuance rose 3.7% to $5.56 billion, the highest since 2014. Overall Asia-Pacific local currency volumes reached $1.37 trillion year-to-date, tracking toward another record year after 2025's $4.76 trillion.

U.S. dollar bonds still dominate at $132.6 billion (up 2.5%), but the shift toward local currencies is accelerating.

Major Deals

Three landmark Hong Kong transactions raised nearly HK$42 billion ($5.4 billion) in one week:

• Airport Authority Hong Kong: HK$19 billion
• MTR Corp: HK$18.9 billion (green bond with 4x oversubscription, receiving HK$60 billion in orders)
• Cathay Pacific: HK$2.08 billion (first HKD public bond)

Market Drivers

DBS's Clifford Lee cited diversification away from dollar dependency and expectations that local currencies will remain strong. Hong Kong's lower borrowing costs compared to the U.S. (despite currency peg) and scarcity of high-quality assets fueled demand.

Markets briefly paused after conflict escalation in early March but rebounded quickly following the U.S.-Iran ceasefire on April 8.

Investment Trends

New investors from London and Hong Kong insurers are entering Singapore dollar markets. Investors remain selective, favoring investment-grade issuers and strategically important entities while avoiding weaker balance sheets.