Nov. 21 (Bloomberg) -- ``This is where all the action is.'' So said Peter Fisher when asked why he was in Hong Kong the other day.

Fisher's name will be familiar to observers of the global economy. While he was at the Federal Reserve Bank of New York in the late 1990s, he coordinated efforts to prevent the meltdown of hedge fund Long-Term Capital Management from derailing the international financial system. In 2001, while working at the U.S. Treasury, he oversaw the scrapping of the 30-year bond.

Now Fisher, 49, is back in the private sector and moving to the region that's the next bond market frontier. ``Asia is just booming,'' said Fisher, head of Asia operations at New York- based investment firm BlackRock Inc.

Last week, many of his peers were in Asia for a ``Global Bond Summit'' hosted by the Bond Market Association. That the New York-based group chose Hong Kong, the gateway to China and Asia's economic boom, says it all.

Throughout Asia there are countless companies that borrow from banks and would prefer to tap the capital markets for financing. Moreover, the breadth of this region's infrastructure needs is nothing short of daunting. That means almost unparalleled opportunities for Wall Street's bond houses, investors and consultants.

Asia's Debt Boom

Asia is trying to create more international and liquid markets, while it reduces the bad loans that once held back growth. Last week, Bloomberg News reported that JPMorgan Chase & Co., Morgan Stanley and other investors are finding diminishing returns in Asia's $1 trillion market for bad loans as distressed debt sales fall.

Attention now is turning to Asia's nascent underwriting boom. Last week, Hong Kong's swankiest hotel lounges, pubs and eateries were awash in Western bond marketers with dollar signs in their eyes. The scenes were reminiscent of a decade ago, when corporate executives trickled in to Asia to expand businesses and pump up profits.

``Asia has arrived in the global bond markets,'' Florian Schmidt, head of debt sales for South Asia and Southeast Asia at Bank of America Corp., said at the Hong Kong event. ``We are looking at a growing market.''

Field of Dreams

The trouble is, Asia has a long way to go to realize its goal of deeper, more liquid debt markets. Eight years after the Asian financial crisis taught this region that it needs trusted capital markets, it's still debating things like issuance procedures, settlement infrastructures and accounting standards.

An even more basic debate is how to jumpstart the process. Some experts say working jointly and creating regional bond funds that buy local-currency debt will accelerate things. Others say that puts the cart before the horse -- that it's better for countries to develop markets domestically first and then join hands with neighboring economies.

Amid such questions, Asia is still shipping well over $1 trillion of savings to the West, where it's parked in U.S. Treasuries. That's an unfortunate arrangement given that Asia should be using that money to fund research and development, infrastructure, education and health initiatives.

``It's funny that people say, `If you build it, they will come' -- they being investors,'' said Vincent Kok, director for global fixed-income portfolio management at State Street Global Advisors, borrowing a line from the film ``Field of Dreams.'' ``Asia has the world's biggest pool of savings, meaning we already have the investor base. It's more a matter of if we build it, they will stay here.''

Long Way to Go

It's a great point -- one that doesn't get Asia any closer to trusted, smoothly functioning debt markets like those in the U.S. If Asia is to reach its full potential, it needs bigger, more vibrant debt markets.

Amid efforts to accelerate the integration of Asia's economies, the Asian Development Bank has been pushing for more sophisticated debt markets. ADB President Haruhiko Kuroda wants to take things even further: a single Asian currency.

An Asian euro is a long way off. Still, better debt markets sure would come in handy given that many analysts say that central banks will keep raising interest rates amid high global oil prices.

Rates Headed Higher

``Except for Indonesia, Asian central banks have lagged the Federal Reserve's rate hikes,'' said Irene Cheung, an economist ABN Amro Holding NV. ``We're looking for further rate hikes over the next six to 12 months in Asia.''

Asia has come a long way from the dark days of the 1997- 1998 crisis, said Nicholas Kwan, economist at Standard Chartered Plc. While it is a work in progress, banking systems are being strengthened and foreign-currency debt reduced. Currency reserves have been amassed to protect foreign exchange rates and governments are working to reduce corruption. There have been notable advances, though far from enough.

``The good news is that in this rising rate environment, Asia may still fare better than the rest of the world,'' Kwan said. ``Still, better bond markets would help.''

To contact the writer of this column: William Pesek Jr. in Hong Kong, or through the Tokyo newsroom at wpesek@bloomberg.net, and.

Last Updated: November 20, 2005 12:07 EST