Overview

As Asia’s financial markets shudder back to equilibrium after last year’s dizzying falls, the region’s banks and corporates are beginning to look about themselves again. The financial scene they face has changed radically. Where once international investors circled round, eager for a share of Asia’s soaring economies, now the landscape is almost deserted. Stockmarkets have fallen to 50% to 80% of their former levels, spreads on bonds from Asian issuers have widened by two to 10 times, and international bank lending has dwindled to a trickle. In Japan and Korea, the highly developed domestic banking markets are jammed — banks cannot fund themselves at their accustomed spreads and are backing away from lending to their clients. This year — and for the foreseeable future —international investors will need much convincing to fund Asian businesses. Investment bankers will have to explain the creditworthiness of their clients from first principles, and justify the level of reward being offered. The successful trades will be the region’s best credit stories — deals which can be presented as exceptional or unique. In this new wilderness, issuers of all kinds will look to enhance their credit through structured financings, and alongside equity linked debt, securitisation is coming to the fore. Jon Hay reports.