Securitised debt markets in Asia are poised for growth, but challenges remain

Asian securitised debt experienced a steep reduction in the issuance volumes during and immediately after the financial crisis, with a large number of active investors withdrawing from or reducing their appetite for such investments. But we are now seeing the appetite for securitised debt return in the fast-growing Asian economies – a trend also seen in the global securitised debt markets. The growth in Asia, however, is perhaps currently limited by the number of active investors. In Asia (ex-Japan), a significant majority of both cross-border securitised debt and local currency securitised debt issuances continue to be placed with banks or bank-sponsored vehicles, funds and insurance companies. The emergence of investors, both Asian and global, may be a reflection of the state of global liquidity. The lack of highly rated, quality assets will only encourage investors to consider the merits of Asian securitised debt, especially from a relative value return perspective.