Japan to set up working groups with Indonesia, Malaysia, Singapore, Philippines & Thailand on bonds

Japan is to set up bilateral working groups with Indonesia, Malaysia, Singapore, the Philippines and Thailand to discuss ways to improve cooperationin bond market. But some sees Japan buying of foreign bonds that it looks like an effort to further weaken the yen. A Bloomberg article, says, “To encourage the development of regional bond markets, Japan has invested in the Pan Asia Bond Index Fund, which invests in government bonds issued by Indonesia, Malaysia, the Philippines, Singapore and Thailand, the finance ministry said. It didn’t specify the amount.” Yet Japan’s move is not new, both Standard and Poor and the ADB are involved in helping develop the Asian bond market.  For example, Standard & Poor’s is set to play a role in helping develop the bond market in Asia, which shows a greater thirst for funds for infrastructure investment and looks to bond-market development as a way to withstand global shocks and stimulate economies more efficiently and effectively. Deven Sharma, president of the rating company, said recently that in several years, Asia will need US$750 billion-$800 billion over the next 10 years for infrastructure investment given projected strong economic growth. The broader bond market will support fund-raising and strengthen the business sector, which need access to capital. Asian markets are facing a daunting task to answer to the financial need, he said. “It’s clear there’s a lot of savings and there’s a lot of liquidity, a lot of money available within the market. ” S&P’s paper noted that in Asia-Pacific, annual domestic corporate bond issuance increased 1.5 times from 2005-09, reaching $758.4 billion in 2009 (Source).

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