Capital regulation adds risk as Asia debt safety net decays

Hong Kong

DEBT crises and heavy trading losses at some Asia-Pacific companies have exposed cracks in the region's corporate debt market - suggesting a regulatory push to make the global financial system safer could unintentionally be having the opposite effect.

While primary bond markets in Asia are setting issuance records thanks to ultra-low interest rates, global banks are pulling back from the secondary and the credit derivative markets in response to more stringent regulatory capital requirements.