Asia rises on MTN agenda while public market pressure predicted to grow in 2026

A flurry of callable dollar bonds from SSA issuers, some sizeable deals in euros from European sovereigns and growing momentum in the Hong Kong dollar market were among the highlights of the medium term note market in 2025. Bankers predict tougher going in 2026 as heavy public market issuance threatens to crowd the field, although growing Asian demand, underpinned by a rotation out of dollar assets could pull more flow into regional currencies.

In GlobalCapital’s medium term note market outlook survey, 53% of respondents expect overall private placement volumes in 2026 to be about the same as this year. Around 27% see volumes rising and 20% predict a decline. The pattern is consistent across the SSA, FIG and corporate sectors.

Tight spreads offer near-term support for buyers. “If you zoom out of credit markets, we’re close to all-time tights in spreads across Asia, the US and Europe, in most currencies,” says Oliver Greer, global head of MTNs at Standard Chartered. “That means a very strong risk environment. If issuers can print at tight spreads, public and private volumes should rise. We’d expect issuance to keep increasing so long as this backdrop holds.”

Issuers, for their part, are happy to roll with the demand in the private market, where investors are the driving force.

“As our MTN funding is reverse enquiry-driven, we do take up and react to external demand,” says Mustafa Sari, senior funding manager at KfW. “Despite changes in the market and shifts in demand for currencies and products, our overall funding in MTNs usually remains in a similar ballpark volume wise.”

Meanwhile, some SSA borrowers predict modest growth in their private funding as they diversify into new formats and tenors. “We are expecting a slight increase in the funding plan, which will be addressed mostly through the MTN programme, from $2.6bn in 2025 to $2.8bn in 2026,” says Tomas Ozuna, capital market head at the Central American Bank for Economic Integration.

One of the key drivers of volume in private markets next year, according to MTN bankers, could be the appearance of new issuers. “The redemption wall for 2026 points to 10% growth versus 2025,” argues Adrien Falconet, head of MTNs and private placements, Asia Pacific at Crédit Agricole. “Debut issuers and sub-market developments in local currencies, cross-border flows and structured notes fuelled by new pockets of liquidity in Asia shall drive net supply.

“Middle East banks, especially in Saudi Arabia, are setting up MTN programmes and ramping up funding plans, which will expand the Asia and Middle East corridor already in place.”

Callable dollar notes from SSAs have been a popular yield enhancement trade this year in both private and public markets, supported by high base rates and short dated demand.

Of those surveyed, 55% of respondents expect interest rate-linked callables to be the most popular form of structured note in 2026, followed by repacks via special purpose vehicles (28%) and structured floaters (18%).

GlobalCapital’s MTN Monitor recorded almost $14bn of dollar callables between January and November 2025, up from $9.9bn in the whole of 2024. SSAs accounted for 78% of 2025 issuance and 80% in 2024.

“Rate-linked callables — European and Bermudan in US dollars — are likely to lead the pack for structured issuance,” says David Morland, head of MTNs and EMEA financial institution origination at MUFG. “The yield enhancement for the safety of SSAs has been appealing to investors in 2025.”

“One big trend we see in Asia is multi-call callables, including supranational prints in dollars — fixed rate and zero coupon multi-callables,” says Greer. “As rate volatility rises, the embedded option is more valuable, so the yield pick-up increases.”

Also driving issuance will be the refinancing of previous deals as they are called or mature. “The redemption wall next year will be big as half of those trades had a first non-call period at one or two years after issuance, which will create reinvestment needs,” says Falconet. “More investors have embraced the trend and deal counts have almost doubled from 2024.”

Apart from SSAs, dollar callable volumes will also hinge on bank supply and cross-currency appetite, especially at the short end where European money managers are active. “In dollars, if banks keep issuing callables, the market will be bigger, but it also depends on how euro investors behave, since we see decent euro volume at the short end from asset managers and some insurers,” says a head of MTNs at one of the market’s busiest desks in London.

Asian currencies have gained prominence this year as issuers react to global tariff changes and as regional bank treasuries deploy more balance sheet to local units. De-dollarisation has also pushed a broader currency mix.

The euro was the most popular MTN currency between January and early November 2025, according to MTN Monitor, with €48.8bn issued. Then followed the US dollar with $34.2bn issued with and Hong Kong dollars third at HK$122.1bn ($15.7bn).

For 2026, respondents believe the same three currencies will dominate and say supranationals, Western European and Asian issuers will be the most active cohorts.

“A key theme is funding diversification,” says Greer. “Headlines around trade disputes have pushed issuers to broaden their currency mix so the US dollar is less dominant.

“Hong Kong dollar [issuance] is up 20% this year, maybe closer to 30% depending on the measure; Aussie dollar [issuance] is growing quickly; offshore renminbi too. We expect private placements to follow broader market volumes.”

About two thirds of respondents say the private market’s main challenge next year is a bigger focus on the public market as cheap government curves could draw demand away from MTNs.

“Government bonds remain cheap historically, and investors who can buy secondary bonds and repackage them with a structured pay-off have been very active,” says Aya Kawamoto, managing director at Nomura International.

“I expect third-party PP issuance next year to be broadly challenging. It varies by region and currency. In Asia, Chinese banks flush with liquidity have been buying strongly, in both US dollars and local Asian currencies. Looking out to 2026, volumes in US dollars may rise again, but in Europe I expect a decline,” she adds.

Many MTN bankers speaking to GlobalCapital say that when public issuance is heavy, pricing cheapens as a result, allocations are easier to achieve, and investors have less reason to look at private placements.

But that pull will lessen should the increase in demand saturate the public market. “What has helped our market lately is that many issuers have limited needs, public books are often overwhelming, valuations are tight, and investors are under-allocated,” says a head of MTNs. “That pushes interest into privates.”

Beyond the public versus private tussle, respondents flag macroeconomic and monetary policy as factors that will affect 2026 volumes, with 20% pointing to global economic conditions as the most important factor, while central bank interest rate decisions and low volatility each accounted for 7% of responses.

“Geopolitical instability could impact cross-border issuance with SSAs potentially facing funding pressure due to political risk or sanctions,” notes Morland.

Rules and rates matter for product mix as well as for outright volumes. “On the structured side, given the success of callables at the moment, regulatory shifts could change capital treatment,” says another senior MTN banker in London. “That may affect issuance.”

These forces can also work in favour of PPs. When public markets destabilise, bankers say flow often migrates to private formats, where execution can be quicker and more discreet.

“Ongoing rates volatility supports structured flow, as seen in the dollar callable pick-up for SSAs,” says Falconet. “Consensus points to some spread widening and more volatility given US-China trade policy, central bank cut cycles and large government deficits that may give a hard time to the long end of government curves. Any weak spot in risk should weigh on primary and support PPs.”