Asean banks' bond supply will remain as a small share of Asia ex-Japan's in 2H2025, mainly in local currency, as solid capital and liquidity ease refinancing needs. Dollar and diversification needs may spur offshore issuance, with some likely refinancing costly Additional Tier 1 into Tier 2 bonds or replenish buffers to optimise capital amid rate cuts and risks.
Bonds issuance by major Southeast banking sectors should remain modest through year-end amid expected interest rate cuts. This is likely due to the banks' solid capital and funding profiles and their manageable refinancing needs.
Some well-capitalised lenders with good access to the market could choose to issue subordinated debt to optimise and diversify their costlier capital structures when rates are cut.
Local-currency issuances, driven by refinancing needs, may dominate in 2H2025 on cost advantages and avoidance of FX volatility. Dollar funding needs might also push some banks to tap the offshore market.
Asean banks collectively comprised less than 2% of the Asia ex-Japan banks’ issuance market share in the year to date through Aug 28, based on Bloomberg’s Data.
