Capital regulation adds risk as Asia debt safety net decays
Stringent requirements force global banks to pull back, draining away liquidity from CDS market
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.
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