Why Issue Bonds Offshore?

This paper asks why Asia-Pacific residents issue debt in offshore markets and considers the implications for domestic debt markets. The authors use unit record data for bond issuance by non-government residents of Australia, Hong Kong, Korea, Japan and Singapore to link the decision to issue offshore to potential benefits. The results suggest that residents of smaller markets issue bonds offshore to arbitrage price differentials; to access foreign investors; and to issue larger, lower-rated or longer-maturity bonds.