...Emerging Asia's (EM Asia) local-currency debt capital markets have grown rapidly since 2008, but its banks continue to be the main source of funding for corporates, and hold the vast majority of private-sector credit exposure. Foreign holdings of local-currency government bonds across EM Asia have risen substantially, but foreign portfolio capital is still invested predominantly in domestic equity markets. Local-currency debt capital markets across EM Asia have doubled in US dollar terms since 2008, but have hardly grown as a percentage of GDP ¡ with the exception of Malaysia and Thailand (Figures 1 & 2). Governments continue to represent the bulk of notes outstanding. Corporate issuers have boosted their share of the total by roughly 9 percentage points since 2008, but still only represent approximately 20% of the aggregate market (Figure 3). A comparison of aggregate domestic bank lending to the stock of local-currency corporate debt securities suggests that private-sector exposures are...
