📒 Quick Take: Asia’s Bond Tide
After nearly four years of drought, Asia’s bond tide has returned as issuers are wading back to a more receptive offshore market.
India’s Vedanta Resources and Australia’s Nickel Industries drew strong demand, while Southeast Asian issuers such as Giti Tire and Muangthai Capital tested investor interest.
Asia’s high-yield market is essentially a game of musical chairs where lenders pass a credit to each other and hope that the music doesn’t stop prematurely.
After nearly four years of drought, Asia’s bond tide has returned as issuers are wading back to a more receptive offshore market.
China’s wave of property defaults unleashed by China Evergrande’s collapse in late 2021 – combined with US interest rate hikes from 2022 to 2023 – had sucked the oxygen out of Asia’s high-yield bonds as investors fled to safety. However, the sector started bouncing back in 2024, delivering a “robust” return of 15.2% in USD terms, according to a UBS report.
China’s real estate sector represented 38% of Asia’s high-yield market five years ago, but this figure has fallen to 7% because many Chinese developers had defaulted and were dropped from the index, UBS said in its February 2025 report. “As a result, the Asian high-yield market has become much more diversified in terms of both countries and sectors.”
This was partly a function of demand and supply, as China’s property meltdown blew a hole in Asia’s high-yield universe and investors had to find a way to put their money to work. In short, investors have been reducing their reliance on Chinese developers and diversifying to other countries such as India, Australia and Indonesia.
Hot Bonds
Indian conglomerate Vedanta Resources announced on 1 October 2025 that its subsidiary’s USD 500 million bond sale was more than three times oversubscribed, drawing bids exceeding USD 1.6 billion. This came after Australian miner Nickel Industries upsized its USD 500 million bond issuance to USD 800 million last week.
Southeast Asian issuers such as tire manufacturer Giti Tire and consumer lender Muangthai Capital have also been gauging investor interest, according to a market friend. Even Chinese developer Seazen Group managed to sell a USD 160 million bond last week, though the two-year notes were priced at a hefty 13% yield, Bloomberg reported.
Underscoring the appetite for fresh bond supply, Vedanta and Nickel Industries managed to attract strong demand despite some headline risks. For example, the deadline for the planned “demerger” of Indian operating company Vedanta Limited was reportedly delayed until March 2026, pending approvals from the National Company Law Tribunal (NCLT) and other authorities.
Vedanta has also been the target of US short-seller Viceroy Research, while some analysts are reportedly concerned that the company is over-extending itself by proposing to acquire insolvent infrastructure developer Jaiprakash Associates.
Meanwhile, Nickel Industries pulled off its bond sale even after its Australian-listed shares plunged in March amid concerns that the Indonesian government would raise royalty rates, AFR reported. Nickel Industries operates mines and processing facilities in Indonesia.
Musical Chairs
Asia’s high-yield market is essentially a game of musical chairs where lenders pass a credit to each other and hope that the music doesn’t stop prematurely. Even if the fundamentals may not be stellar, everything’s fine if the borrower can find new lenders to take out the existing creditors.
In the case of Vedanta, I previously wrote that the group played two cards – assets and timing – to its advantage. The London-based holding company secured a crucial USD 1.25 billion private credit facility in late 2023 by offering the lenders access to dividends and “brand fees” from its subsidiaries.
That private credit lifeline was expensive but it served as a bridge to a more sustainable source of funding for Vedanta. Now, the company has successfully issued seven-year bonds for refinancing, which means that it was able to replace some of its high-cost debt with cheaper and longer-dated notes.
The high-yield musical chairs usually involved banks and bondholders swapping seats with each other, but borrowers like Vedanta have another option now. Private credit funds typically come with a higher risk appetite and flexibility to structure their facilities, though they also tend to extract their terms.
While the game has benefitted from a third player, it might be worth remembering how rapidly Indonesian textile company Sri Rejeki Isman (Sritex) spiralled into distress when confidence evaporated in 2021. (Click here for a compilation of my takes on Sritex).
It’s game over if the players run out. But for now, the music seems to be back on.