Covered bond market in Asia set for growth as Australia readies new legislation

The Asia-Pacific region has yet to witness the glut of covered bonds issuance seen in the rest of the world, but that could be set to change as Australian lawmakers prepare to introduce a covered bonds framework for domestic issuers and countries such as Korea and New Zealand enter the market.

A blossoming market: covered bonds in Asia

Covered bonds globally have just enjoyed a record January, with €45 billion of supply in the European markets alone. The market grew 45% in 2010 to $311 billion, according Thomson Reuters, but what of Asia-Pacific? Oddly, this part of the world – so important in terms of global GDP and trade, and increasingly in capital market flows – has completely missed out.

There are tentative signs, however, that an Asian covered bond market is in development. In Australia and New Zealand, covered bonds –