R Ravimohan: Ringgit on

The recent issue of State Bank of India in the ringgit bond market in Malaysia is a signal event, and perhaps we have not paid the attention this development deserves. There have also been a couple of Korean issues that have tapped this market in recent times and several more to come soon, including some more Indian issues. A queue is also building up in the Thai Baht market of issuers from overseas.

Though the number of transactions and the amounts of funds raised are modest, this is a welcome new trend in the Asian capital markets, which augurs well for capital market. Issuers will have more choices of markets to raise money from. Competition among these markets, including the well established markets in Tokyo, Hong Kong and Singapore will drive, or at the least keep the prices low. Investors in each of these markets will have a greater variety of investment opportunities. Intermediaries will have a more diversified portfolio of business. And hopefully through these transactions, best practices will transcend local boundaries. Over time these initiatives could help create a pan-Asian market leading to greater investment flow from the rest of the world into this region.

The Malaysian corporate debt markets offer a good case study. It is not just happenstance that its ringgit bond market has set this breakaway trend. Malaysia has perhaps the deepest and the most liquid bond market in the region. The Malaysian corporate debt market has enjoyed enormous growth, rising from MYR 4.1 billion in private debt securities (PDSs) outstanding in 1989 to approximately RM527.3 billion at end July 2007, equivalent to about $63 billion and 92 per cent of Malaysian GDP.

In addition, the Malaysian corporate bond market represents 37 per cent of the country's GDP