Nov. 11 (Bloomberg) -- As Wall Street's masters of the universe funnel into Hong Kong next week, one thing is certain: Asia's debt markets are getting ready to take on the world.

That the New York-based Bond Market Association is hosting a ``Global Bond Summit'' here is one sign. U.S. experts on everything from securitization to credit risk to law will descend on the city to opine on a region that may spawn some of the world's biggest and most vibrant debt arenas.

Another sign is a Web site being unveiled there: a ``how- to'' guide for Asian corporate bonds. While it may not sound like exciting stuff, the step-by-step primer on the mechanics of buying and trading company debt may provide a boost to Asia's bond business, and, eventually, economic growth.

It's an enhancement to the Asian Development Bank's AsianBondsOnline project (http://www.asianbondsonline.adb.org), which was started earlier this year for government bond buyers. Its aim is to demystify the process of dealing in corporate bonds in China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand and Vietnam.

Think of it as one-stop shopping for information on everything from tendering procedures for new securities to how secondary markets work to qualifications for bidders to legal, tax, custodial and registration requirements across Asia. It allows one to avoid the red tape normally involved in wading into less-developed debt markets.

Bonds and Growth

The effort is part of the ADB's push to create deeper Asian bond markets, one that gained speed after Haruhiko Kuroda took over the Manila-based organization in February. A former vice finance minister in Japan, Kuroda knows all too well how the dearth of dynamic debt markets holds back Asia.

Their absence contributes to Asia's habit of parking over $1 trillion in U.S. Treasuries. Healthy bond markets might keep that money at home to reduce interest rates and fund everything from education to infrastructure to research and development. Asian companies also are too reliant on banks for loans, forcing them to pay higher interest than they might in the open markets.

The ``How to Buy a Corporate Bond'' initiative could scarcely have come at a better time. While the U.S. and Europe enjoy sophisticated and transparent markets for corporate, mortgage-backed and other non-government debt, Asia lags behind. Quite a bit, in fact.

Incomplete Recovery

It's a reminder that this region's post-financial-crisis recovery is a work in progress. Asia's 1997-1998 meltdown showed how underdeveloped bond markets leave economies hypersensitive to interest rate moves, credit crunches and currency volatility. Their absence exacerbated Asia's problems.

Since then, as growth returned, the effort to foster debt markets has become less urgent. Yes, governments have worked to create entire yield curves of securities, from three-month debt to 10-year or 20-year maturities. There also has been varying degrees of progress in building the networks of dealers that bid on government bonds like the one that exists in the U.S. Progress in developing corporate markets has been far less substantial.

Asia is the new frontier of capitalism, boasting rapid growth, swelling populations, undervalued stocks and droves of companies that have yet to issue debt. It's no wonder that bond firms the world over are clamoring here for a piece of the pie.

The search for the next big debt investment is drawing a who's who of Wall Street's counting houses to Hong Kong next week. Between schmoozing sessions among underwriters, borrowers and investors, attendees can check out panel discussions with titles like ``Investor Requirements for Debt Markets in Asia'' and ``Asian Securitization Markets: Identifying Barriers to Growth.''

Boosting Living Standards

Obstacles to deeper markets in Asia are many. They include the small size of public markets that can be used as benchmarks for pricing debt and reluctance to follow international accounting standards. Corruption and unreliable regulation don't help. Neither does a legacy of restraints on capital flows.

All this is a blemish on Asia's post-crisis report card, and a big one at that. While the region boasts booming economies, the absence of a liquid bond market that can absorb financial shocks and disruptions is a weakness. A smoothly functioning bond market can serve as a refuge for investors bailing out of stocks. As Asian stocks fell in the late 1990s, investors had no other quality assets to buy, and so they fled.

The immediate beneficiaries would be small- and mid-size enterprises that now go begging for capital. Banks are often preoccupied with larger, more established businesses, not upstart companies that create new jobs and revitalize economies. Entire populations may get a boost from companies having more efficient ways to fund future growth and, eventually, pay higher wages.

Thanks to tools like ``How to Buy a Corporate Bond,'' Asian debt may appear less, well, foreign to many investors. Rising demand for private debt will encourage new issuance and create opportunities for economic growth.

It's a rare win-win for both the world's premier bond houses and Asian households just scraping by.

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

Last Updated: November 10, 2005 14:16 EST