Asia Municipal Bond Issuances likely to become more popular: S&P

SINGAPORE - Bond issuances by local and regional governments in Asia could start to become more acceptable to investors, according to ratings agency Standard & Poor's. 

S&P says several key factors now influence the level of subnational borrowing in the region, but as governments loosen restrictions - or prohibitions in some cases - on local and regional governments (LRG) borrowing, a sound borrowing and monitoring framework would boost the sustainability of local finances.

"For national governments and investors alike, improvements to local financial management practices, transparency, and governance will be key components of support for greater LRG debt issuance," said S&P credit analyst, YeeFarn Phua.

LRGs in Japan, Korea, and India are already active in domestic bond markets. "Applying the above factors more broadly to other countries in Asia, in our view, those with a high likelihood of increased subnational borrowing in the next three to five years would also include China, Indonesia, Philippines, Taiwan, Malaysia, Thailand, and Vietnam," Phua says. www.standardandpoors.com (ATI).