14 November 2018

Large fund managers cool to Asian hybrid bonds, WSJ says

Asian banks are selling new and complex types of hybrid bonds to bolster their cash buffers but large funds are keeping their distance because of concerns over the safety of the securities, the Wall Street Journal reported Wednesday. Hong Kong midsize bank Dah Sing Bank Ltd. plans to raise US$200 million worth of subordinated debt while Bank of India is considering a similar bond, the report said, citing people close to the deal. Because the debt is subordinated, investors could be wiped out if the issuer’s financial health turns sour. In the next five years, banks in Asia are expected to raise about US$100 billion with this type of debt in the international capital markets, according to Morgan Stanley. Last year, sales were US$4 billion including those in local currencies, the report said.

– Contact HKEJ at [email protected]


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