Asian currency debt gains favor as investors cut dollar exposure

Markets Iran war, high US rates fuel record issues in Hong Kong, Singapore, Australia Hong Kong dollar bond issuance has gained traction in recent years as the market is viewed as relatively low‑risk. (Photo by Shinya Sawai) HONG KONG — Asia’s local currency debt market has emerged as an unlikely winner from the market volatility caused by the Iran war and a growing desire on the part of investors and companies to reduce their exposure to the dollar. Global fixed-income investors have been adding Asian currency debt in recent years as part of a broader strategy to diversify their portfolios. The shift has accelerated since the outbreak of the conflict in Iran on Feb. 28, which has sent oil prices skyrocketing, rattled the U.S. Treasuries market and created expectations that U.S. interest rates will stay elevated. Dealogic data shows that developed Asian markets such as Australia, Hong Kong and Singapore are recording multiyear and in some cases record-high debt-issuance volumes.