The Asian Bond Markets Initiative (ABMI) Ministry of Finance, Japan

Transcription

1 The Asian Bond Markets Initiative (ABMI) Ministry of Finance, Japan OECD-ADBI 9 th Tokyo Round Table on Capital Market Reform February 2008, Tokyo, Japan

2 Background and Purpose of the ABMI Background High savings in many Asian countries were not efficiently utilized. Bond markets in the region --- underdeveloped Dominant financing tools --- short-term bank loans provided by the foreign capital The savings deposited in local banks in the region have been funneled into international financial centers and then back to the region in the form of dollar-denominated short-term capital, which is used for local currencydenominated long-term investment. maturity and currency mismatches ( double-mismatch ) Purpose To enable the private sector in Asia to raise and invest long-term capital without maturity and currency risks. 1

3 Major issues of ABMI [ 1.Diversification of issuers ] Bond Markets in Asia Government/ Government Agencies Local Japanese Enterprises (Issuance of bonds) (guarantee) Government Agencies (e.g. JBIC ) Global Enterprises Local Enterprises (Issuance of bonds) (Issuance of bonds) International Financial Institutions (World Bank ADB IFC) [ 2.Enhancing Bond Market Infrastructure ] Utilization of existing guarantee providers (e.g. JBIC) New credit guarantee mechanism Credit enhancement toward bond issuing technical assistance Regional Rating Agencies Information dissemination mechanism Market infrastructure (settlement etc.) Development of legal systems (securities laws etc.) Infrastructure

4 Framework after ASEAN+3 Finance Ministers Meeting in May 2005 ASEAN+3 Finance Ministers Meeting (AFMM+3) ASEAN+3 Finance and Central Bank Deputies Meeting (AFDM+3) Focal Group Meeting (Deputy s Deputy(Director-General)Level) (Chair:Rotating) Ad-Hoc Support Team for the Focal Group (Chair:Rotating, same as Focal Group) Technical Assistance Coordination Team (Chair:Indonesia Vice-chairmen:Malaysia, Philippines) 1 Creating New Securitized Debt Instruments (Chair:Thailand) ASEAN+3:Association of Southeast Asian Nations, China, Japan, and the Republic of Korea 2 Credit Guarantee and Investment Mechanisms (Co-chairs:Korea and China) 3 Foreign Exchange Transactions and Settlement Issues (Chair:Malaysia) 4 Rating Systems (Co-chairs:Singapore, Japan) 3

5 High growth of local currency bond markets in Asia China (Excluding Hong Kong) Indonesia Korea Malaysia Philippines Singapore Thailand Vietnam (in USD Billions) , , Subtotal , , fold 2.3-fold Japan 4, , ,487.8 Hong Kong Total 4, , , fold 1.5-fold (Note) All figures are the sum of amount outstanding of government bonds and corporate bonds. Percent of GDP in parenthesis. * Vietnam: as of December (Source) Asian Development Bank Asian Bonds Online 4

6 The Joint Ministerial Statement of the 10th ASEAN+3 Finance Ministers Meeting 5 May 2007, Kyoto, Japan =Excerpt= On the Asian Bond Markets Initiative, we encouraged collective efforts of ABMI Working Groups in prioritising the work plans and setting clear deliverables to move forward. We welcomed the diversification of issuers and types of local currency denominated bonds, and endorsed undertaking of the following new studies: Exploring New Debt Instruments for Infrastructure Financing, Promotion of Securitisation of Loan Credits and Receivables, and Promotion of Asian Medium Term Note (MTN) Programme. We also recognised noticeable progress of studies on Regional credit guarantee and investment mechanism, settlement system, credit rating harmonisation as well as technical assistance coordination. Furthermore, we were also pleased to see the strengthened public and private sector cooperation under the ABMI. 5

7 Exploring New Debt Instruments for Infrastructure Financing Bonds issued for infrastructure investments with source of repayments stemming from the proceeds of the projects (Infrastructure Bonds). Investment decisions do not depend on credit ratings of issuers, but on the profitabilities of the projects. It is expected that the study under the ABMI will suggest new types of debt instruments and associated infrastructure project. Users Usage fees Benefit Infrastructure Project Payment (interest and principal) Investors Insurance premium Source : Research on the utilization of Revenue Bond Policy Research Institute for Land Infrastructure and transportation (Revised.) Insurance company Guarantee for default 6

8 Promotion of Securitization of Loan Credits and Receivables Further securitization of loan credits and receivables would contribute to enhance the volume of bond markets, as well as to a further development of various types of collateralized debt obligations. It is expected that the study under the ABMI will explore the measures to support a further promotion of securitization of these assets. Major impediments, standards and best practices for realization of these instruments will also be identified. (Securitization of Account Receivables) Account Receivables Notes /Bonds Client Originator SPC/SPV Investors Goods/Services Transfer of A/R proceeds proceeds Source: East Asian Finance (World Bank), METI,Japan 7

9 Promotion of Asian Medium Term Note (MTN) Programme MTN Programme is the framework which enables companies to issue bonds/notes with various maturity and rates under certain simple procedures and is a major source of funding in the US and European market. It is expected that the study under the ABMI will find the way for the development and expansion of MTN program in the region utilizing the modality of the ADB s Asian Currency Note Programme launched last year. (ADB s Asian Currency Note Programme) Programme Offering Circular/Documents (English Law) Local currency bonds Issuer Dealer (as primary subscriber) Home local currency Local currency proceeds Home local currency bonds Respective domestic clearing documents will be documented under local laws Investors (Singapore Hong Kong Malaysia Thailand) Source:ADB 8