Demand for local currency funding has remained strong this year as issuers and borrowers aim to reduce their funding cost and diversify their sources of financing – in addition to avoiding foreign exchange risks and minimizing currency mismatches. The local currency deal flow is also driven by the further deepening of domestic capital markets across the region, with the available liquidity able to digest large capital-raising transactions.

According to LSEG data, local currency bond issuance in Asia, outside of Japan and Australasia, has exceeded US$1.59 trillion equivalent as at May 15. The amount, though, represented a decline from US$1.68 trillion equivalent in the corresponding period a year ago. Nevertheless, the issuance in local currency bonds is surging in most markets across the region, underpinned by initiatives to reduce reliance on US dollar financing.

In the Hong Kong dollar bond market, issuance has reached HK$190.96 billion ( US$24.39 billion ) as at May 15, up from HK$124.30 billion in the same period a year ago. Two of Hong Kong’s most prolific issuers, MTR Corporation and Airport Authority Hong Kong ( AAHK ), issued the biggest offerings in this market, pricing their respective transactions a week of each other in April. MTR announced on April 22 the pricing of a corporate green bond amounting to over HK$18.8 billion in three tranches, representing the company’s first Hong Kong dollar public bond deal. The issuance further strengthens MTR’s financial flexibility and expands its diversified funding sources, supporting its long-term sustainability objectives and ongoing infrastructure development for Hong Kong.

The deal comprised HK$8.3 billion of five-year notes with a coupon of 2.88%, HK$7.5 billion for 10 years paying a coupon of 3.30%, and HK$3 billion for 30 years with a coupon of 4%. It generated a combined order book of over HK$60 billion at its peak, attracting a broad-based demand from a diverse pool of institutional investors – reflecting the depth of liquidity available in the Hong Kong dollar market for high-quality issuers and long-dated infrastructure-linked credit.

Then on April 28, AAHK printed a similar triple-tranche senior notes offering totalling HK$19 billion, which also garnered a robust demand that peaked at over HK$55 billion. The Reg S deal consisted of HK$10 billion for three years with a coupon of 2.90%, HK$6.5 billion for five years paying a coupon of 2.97%, and HK$2.5 billion for 10 years with a coupon of 3.38%. The proceeds are earmarked to refinance its existing indebtedness, fund its capital expenditures, and for other general corporate purposes.

Supranationals have also accessed the Hong Kong dollar bond market to raise capital for their sustainable financing agenda. The Asian Development Bank ( ADB ) on January 6 printed HK$5 billion education notes for three years, which garnered orders worth HK$6.1 billion from 21 accounts. On April 13, the World Bank ( WB ) priced an HK$8 billion sustainable development bond for eight years, which attracted a total demand of HK$10.3 billion from 21 accounts. Proceeds are allocated to support WB’s sustainable development activities in its member-countries.

On May 13, WB group member International Finance Corporation ( IFC ) raised HK$6 billion in green bonds for three years, the proceeds of which may be converted into US dollar and will be used to support environmental projects such as climate change mitigation, climate change adaptation, biodiversity protection, and ocean and water protection. The deal generated an order book of HK$11.1 billion from 23 accounts.

Singapore dollar bond market

Issuance in the Singapore dollar bond market also picked up this year with a volume of S$9.39 billion ( US$7.34 billion ) as at May 15, up 15.4% compared with S$8.13 billion in the same period of 2025. The statutory board Housing and Development Board ( HDB ) has tapped the market three times between January and May, raising a total of S$3.24 billion. This included a S$1.12 billion green bond for five years issued on May 6, the proceeds of which were used to finance or refinance eligible green projects under the green building category as set out in HDB’s green finance framework.

Also accessing the market is Singapore lender UOB, which issued on January 14 S$850 million in subordinated perpetual capital securities, intended to qualify as additional tier 1 capital. From Australia, Westpac Banking Corporation on May 12 raised bank capital through the issuance of tier 2 securities amounting to S$500 million. Other issuers tapping the Singapore dollar bond market this year included Singapore Airlines ( S$500 million ), Seatrium ( S$400 million ), and OUE Treasury ( S$150 million ).

Also demonstrating an upward trajectory is the Philippine peso bond market, whose volume rose 29.1% to 423.39 billion pesos ( US$6.89 billion ) in 2025 from 328.01 billion pesos in 2024. It continued to exhibit robust issuance activity this year, with the volume amounting to 242.66 billion pesos as at May 15, or more than three times the amount in the same period of 2025, which was 73.73 billion pesos. Among the biggest issuers during the period, according to LSEG, were the country’s big banks – BDO Unibank, Bank of the Philippine Islands, Land Bank of the Philippines, and Metropolitan Bank & Trust Company – plus San Miguel Global Power, Rockwell Land Corporation, and Century Properties Group.

The Indonesian rupiah bond market followed suit with the issuance volume surging from 135.69 trillion rupiah ( US$7.59 billion ) in 2024 to 220.67 trillion rupiah in 2025. The issuance stood at 66.90 trillion rupiah as at May 15 this year, up from 55.61 trillion rupiah from a year earlier, driven by deals from, among others, PT Merdeka Battery Materials, Bank Rakyat Indonesia, PT Oki Pulp & Paper Mills, Sarana Multigriya Finansial, and PT Bank Pan Indonesia.

The Malaysian ringgit bond market also witnessed an active deal flow in 2025 with a volume of over 138.52 billion ringgit, up 47.2% from 94.10 billion ringgit the year before. This year, the issuance was up 10.1% to 49.59 billion ringgit as at May 15, compared with 45.03 billion ringgit in the corresponding period of 2025. The issuers, according to LSEG, were led by the statutory body Lembaga Pembiayaan Perumahan Sektor Awan, Lebuhraya Duke Fasa 3, Imtiaz Sukuk II ( a special purpose vehicle of Bank Kerjasama Rakyat Malaysia ), Maybank Islamic, Prasarana Malaysia, Pengurusan Air SPV, TNB Power Generation, S P Setia, Cagamas, and Danum Capital ( a SPV of Khazanah Nasional ).

The Thai baht bond market recorded a marginal increase to 904.72 billion baht ( US$27.73 billion ) in 2025 from 896.14 billion baht a year earlier. The volume, though, was down so far in 2026 with the issuance amounting to 268.98 billion baht as at May 15, compared with 301.94 billion baht in the same period last year. The biggest issuers this year included Gulf Development, Siam Cement, True Corporation, Charoen Pokphand Foods, Thai Beverage, and Banpu.

Aussie for diversification

Meanwhile, the Australian dollar bond market has emerged as a favoured destination among Asian issuers seeking to diversify their funding sources and access the large pool of institutional capital. According to LSEG, the total volume of Australian dollar-denominated bonds by Asian issuers surged to A$17.51 billion ( US$12.57 billion ) in 2025 from A$12.92 billion in the previous year. And the robust momentum continued into 2026, with the issuance already reaching A$12.33 billion as at May 15, up from A$9.96 billion in the comparable period of 2025.

Singapore banks have become frequent issuers in the market.  In early January, the Sydney branch of OCBC printed a three-year floating rate note ( FRN ) amounting to A$1.2 billion. The Sydney branch of UOB followed suit in the same month with a dual-tranche offering totalling A$2 billion, comprising A$1.25 billion fixed-rate notes for five years and A$750 million FRN, also for five years. DBS Australia tapped the market as well in February with a A$2 billion offering, according to LSEG data.

MTR also diversified its funding sources via the Kangaroo bond market, announcing on January 22 the pricing of its inaugural senior unsecured green bond amounting to A$2 billion in yet another one of its holistic financing strategies. The issuance represented the largest-ever Australian dollar corporate green bond, and the dual-tranche offering achieved the largest-ever Australian dollar corporate bond order book in history.

The deal was equally split at A$1 billion each for five years and 12 years, and attracted a total demand of A$12.5 billion. Proceeds from the offering are used to support eligible green projects, promote environmental benefits, and strengthen MTR’s long-term sustainability objectives.

Two Asian sovereigns also tapped the Kangaroo bond market for funding diversification. The Republic of Korea accessed the market in December 2024 with its inaugural issuance amounting to A$450 million for five years with an interest rate of 4.51%. The Republic of Indonesia followed in August 2025 with a dual-tranche offering totalling A$800 million. The first tranche was for A$500 million for five years with a coupon of 4.40%, and the second tranche was for A$300 million for 10 years with a coupon of 5.30%.

Korean issuers are increasingly tapping the Australian dollar bond market to reduce their funding reliance on the US dollar and euro bond markets. Among the fundraising done so far this year were that of the Export-Import Bank of Korea, which raised A$1.5 billion in February, and Korea Land and Housing Corporation ( LH ), which tapped the market in May for A$500 million. The three-year social bond was LH’s debut deal in the Kangaroo bond market, with the proceeds allocated for the construction of public rental housing units.