Developing Asia bond market beckons Japanese pension funds

Tokyo

JAPANESE pension funds and life insurers starved for yield at home can increasingly look next door for a bond market that's on the verge of outgrowing their own.

Total outstanding debt in emerging Asian markets reached US$8.8 trillion this year, with about a third of that in China, versus US$9.2 trillion in Japan, according to the Asian Development Bank. Twenty-year government bonds, the maturity preferred by these investors, yield 1.02 per cent in Japan, compared with 3.66 per cent in China, about 5.5 per cent in the Philippines and more than 9 per cent in Indonesia. The ADB is seeking to open the markets and make them more appealing to global funds.