THE ASIAN DEVELOPMENT Bank called on governments in “emerging East Asia”—including the Philippines—to step up efforts in building their respective bond markets as outstanding currency bonds in the region totaled an equivalent of $4.2 trillion as of end-September.

According to the ADB’s Asia Bond Monitor (ABM) quarterly report, the amount is 14.8 percent higher than that in September 2008, and nearly eight times the level at end-1996, or just before the Asian financial crisis struck.

The report refers to China, Hong Kong, Indonesia, South Korea, Malaysia, Philippines, Singapore, Thailand and Viet Nam.

Emerging East Asia accounts for some 6 percent of the global bond market, improving from only 2 percent in 1996.

“Our aim [is] to better balance financial intermediation at home—improving returns on domestic assets, rather than locking excessive amounts in low-yielding assets abroad,” said Bindu Lohani, ADB vice president of finance and administration.

Also, there is a need to increase issuance of local currency bonds, while governments must take measures to encourage institutional and foreign investors to buy Asian bonds, said Lohani, as he addressed the fourth yearly Asian Bond Markets Summit that opened yesterday in Singapore.

He added that governments would need to improve regulatory and policy frameworks so investors would be comfortable investing in the region’s markets.

“Robust local capital markets are essential to diversify the sources of funding necessary to support long-term investments and sustain high growth levels,” Lohani said.

Data from the November issue of the ABM show that while outstanding peso bond issues doubled to an equivalent of $58 billion since 1996, the country still accounts for just 0.1 percent of the world total.

In April, the ADB announced that its $10-billion Asian Current Note Program (ACNP) now includes the Philippine peso and the New Taiwan dollar in addition to the Singapore dollar, Hong Kong dollar and Malaysian ringgit.

The ACNP serves as the first platform in Asia dedicated to the issuances of bonds in local currencies.

Under the scheme launched in 2006, Asian currency denominated bonds may be issued in respective domestic markets under a unified legal and documentation framework, which is expected to promote the integration of the Asian bond market and attract wider investor bases.

Yesterday, Lohani said ADB was in talks with a number of Asian countries to include more currencies in the ACNP.