On Asia’s credit outlook:
“European banks have to shrink over the next few years, they have to de-leverage and one of things that they will most likely end up doing is to shift some of their exposure or assets to Asia. So Asian banks will have to deal with it over the coming 12 to 24 months and will probably have to find new avenues of funding to replace some of the wholesale funding that’s been provided by European banks.
“They are also going to have to sell some of the assets European banks are most likely to exit. What that will mean is that the cost of capital in Asia will gradually rise.
“Access to lending conditions will deteriorate so that’s negative for margins in Asia’s credit market. In the sense that it will force more issuance in the bond markets, it will drive up the cost of capital.
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