More M&As in the pipeline for Singapore firms as ASEAN debt markets surge

Expect cross-border issuance to jump in 2015.

Firms from Singapore and Malaysia initiated 69% of all cross-border acquisitions in the ASEAN between 2004 and 2014, Moody’s Investors Service revealed today.

This is because both economies offer lower funding costs and deeper financial markets that encourage regional expansion.

Moody’s notes that more M&As may be in the horizon as debt markets in six ASEAN countries will register sustained growth in both domestic and cross-border issuance in 2015, following a gradual return to form since volumes fell in mid-2013.

"Generally supportive macroeconomic and market conditions, and the implementation of Basel III capital requirements will provide a favorable backdrop for issuers to tap the market," said Rahul Ghosh, a Moody's Vice
President and Senior Research Analyst.

However, between 2004 and 2014, cross-border acquisitions within the ASEAN region represented just 9% of total acquisitions by ASEAN-domiciled companies, compared to 55% for domestic acquisitions and 36% for acquisitions outside of the ASEAN region.

Moody's also noted that since the 2007 launch of the ASEAN Economic Community initiative, which sought regional economic integration, there has been no material pick-up in regional cross-border acquisitions, despite significantly increased intra-Asian foreign direct investment (FDI), which grew to the current 28% of total FDI from 3% in 2007.