Search
In an era defined by rapid technological change and shifting economic power, the global capital markets are undergoing a profound transformation. Once concentrated in a handful of financial hubs, issuance activity now spans continents, asset classes, and a broadening spectrum of participants. This evolution underscores how interconnected economies are embracing innovation to fund growth, manage risk, and meet the demands of an ever more discerning investor base.
From the resilient rebound of Asian debt markets to the introduction of novel instruments like green bonds and sukuk, the landscape is marked by a surge in both volume and diversity. This article delves into the key drivers, regulatory innovations, and emerging trends that are reshaping how sovereigns and corporations access global pools of capital.
After a period of subdued activity, Asia has re-emerged as a major force in international bond issuance. In 2024, total issuance in the region surged 20% year-over-year to reach $460 billion. Among the contributors, India led with a remarkable 53% increase, raising $13 billion, while China saw a 29% rise to $141 billion. ASEAN markets followed closely, up 37% to $77 billion, and Japan delivered a steady 7% gain, issuing $122 billion in debt instruments.
Driven by an appetite for Asian markets have reclaimed their momentum, the region also welcomed a wave of newcomers. Debut issuers accounted for 4% of total volume, led by China with 137 new entities, reflecting debut issuances symbolizing fresh ambition as policymakers and corporates seek to tap international liquidity.
Outside Asia, emerging markets have continued to rely heavily on US-dollar issuance, particularly among sovereigns. In the first five months of 2024, the Gulf Cooperation Council, Malaysia, Indonesia, and Turkey together represented 51% of EM dollar debt issuance ex-China. Saudi Arabia alone captured 19%, followed by Argentina, the UAE, and Brazil each at 9%, with Turkey at 8%, Indonesia 6%, Mexico 5%, and Chile 4%.
While local-currency markets are deepening, sovereign issuers in EM still demonstrate a pronounced reliance on foreign currency issuance. As of 2013, about 60% of EM sovereign debt was in foreign currency versus less than 20% for financial corporations, amplifying currency risk but also tapping wider investor demand.
Sustainable finance has moved from niche to mainstream. In Asia, 45% of 2024 deals were classified as sustainable or green, outpacing global averages. The introduction of the EU Green Bond Standard (EUGBS) in December 2024 set a new benchmark for transparency, and early uptake in 2025 underscored issuer readiness to comply with stringent bar for issuers.
Islamic finance instruments are also gaining ground. Sukuk represented 12.4% of EM dollar issuance in 2024—down slightly from 15% the prior year but up significantly from 5% in 2017. This growth highlights Islamic finance instruments gaining acceptance in both traditional Gulf and Southeast Asian hubs, as well as among global investors seeking diversification.
In a higher-rate environment, both issuers and investors have recalibrated strategies. Borrowers are structuring shorter-duration bonds or offering coupons that reflect rising funding costs, while investors seek higher yield and quality in an uncertain macro landscape. Credit quality, liquidity, and duration have emerged as primary decision drivers.
The prospect of Saudi Arabia’s entry into JPMorgan’s GBI-EM could trigger substantial capital inflows, diversifying both issuers and investor profiles across the Middle East and beyond.
By broadening the range of issuers, currencies, and instruments, diversified issuance supports driving sustainable economic expansion. Access to international capital allows governments to finance infrastructure, utilities, and social projects, while corporations can optimize their balance sheets and invest in growth areas.
Looking ahead, the convergence of regulatory clarity, product innovation, and shifting investor mandates promises to deepen liquidity and resilience in global capital markets. Issuers that embrace transparency and align with sustainable standards will likely command a premium. at the same time, newcomers from underrepresented regions will contribute fresh perspectives and opportunities.
As we navigate an interconnected financial ecosystem, the ongoing diversification of issuance offers both challenges and pathways to progress. Stakeholders—from policymakers to asset managers—must collaborate to ensure standards evolve in tandem with market ingenuity. In doing so, the international capital markets can fulfill their core mission: channeling global savings into productive, forward-looking investments that underpin long-term prosperity.
References
