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A rare constant in volatile times

Fixed-income markets have seen unprecedented volatility throughout the COVID-19 pandemic. Many companies in the space have struggled with the resulting uncertainty as they navigate the already complex sector in this difficult time.

The Asia-Pacific region saw its share of sharp volatility, particularly in currency markets. The Indonesian rupiah saw a 20 per cent fall followed by a 15 per cent rally. In India, the Sensex stock market saw a 40 decline before returning with a 40 per cent rally.

Rating agency outlook revisions also shook markets, with downgrades seen across Malaysia, India, Maldives, Sri Lanka, Pakistan, Mongolia, Philippines, Thailand, Hong Kong, Indonesia and Vietnam.

The unprecedented output loss brought about by the pandemic and the ensuing policy response is likely to impact market dynamics for some time. In some cases, like in Indonesia, the recently expanded debt monetisation program has the potential to tilt local dynamics towards greater onshore participation as foreign activity falls.

In the near term, ANZ Research says it expects a consolidation in local rates and FX markets, mainly facilitated by global central bank liquidity injections and Asian central bank asset-purchase programs.

Many of the large-scale fiscal stimulus and unconventional monetary measures announced this year, however, are expected to impact the medium to long-term fiscal and external debt metrics.

In the longer-term, local markets outlook will be ever more dependent on the ability to of economies to recover strongly and sustainably – and in that process, escape the debt trap.


For business in the region, these are times of unprecedented uncertainty.

At ANZ, we are committed to providing certainty in our support for our customers – a rare constant in otherwise volatile times. We’re working closely with impacted customers in this space, many of whom are working from home or in other locations to ensure their business retains continuity.

We think that commitment is a big reason why ANZ has been recognised in The Asset’s Local Currency Bond Benchmark Review for its capabilities and insights in research, sales and trading.

A number of ANZ’s local team have been highly commended or ranked very highly in pan-Asian markets across local-market rates sales, trading and research, as we continue to help customers manage risks and identify the opportunities for their businesses.

Similarly to the global financial crisis, the COVID-19 pandemic saw liquidity provision withdrawn across the market and a reluctance to offer views and support to investors.

ANZ’s sales, trading, and strategists decided to take a different approach, as proven by ANZ’s record client bond volumes and market share. Our specialist product offering across US dollar and local currency bond markets has been complemented with consistent insights and support throughout the crisis, enhancing ANZ’s high-quality and longstanding track record.

Our research team is set up to provide bottoms-up and in-depth analysis in footprint markets across Asia. This is especially important in turbulent times, when the flow of information from local markets to global investors or between economies in the region could be slow.

By working closely with our customers, we hope to jointly navigate these ongoing challenges and more in fixed income markets with our customers in the future.

The Asset’s Asian Local Currency Bond Benchmark Review is an annual survey of financial services groups which asks market participants to nominate the top sell-side individuals in research, sales and trading. The survey involved over 300 fixed income investors who are active in the region’s local currency bond markets.

Satish Chellaram is Head of Credit & Rates Investor Sales at ANZ Institutional

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