Asia Sovereigns to Boost Borrowing to $2.5 Trillion in 2014: S&P

Asian nations will increase commercial borrowing to $2.5 trillion in 2014, a 4.9 percent increase from the previous year, according to estimates by Standard & Poor’s Ratings Services.

Net borrowing will make up $1 trillion of that amount, boosting the total stock of debt by 6.9 percent to $15.4 trillion by year-end, S&P said of the 21 countries it covers in the Asia-Pacific region. The share of AAA sovereign debt will stand at around 4 percent this year, while that rated BBB or lower will account for about 10 percent, according to S&P. Japan will probably account for the biggest share of the region’s debt stock at almost 70 percent, followed by China at 10.3 percent, the ratings company said in report dated Feb. 27.

“We expect that Japan -- APAC’s largest advanced economy - - will continue to dominate the issuance of long-term government commercial debt in this region in 2014,” S&P analysts including Liang Zhong and Kim Eng Tan wrote.

S&P predicts Japan, which holds a AA- credit rating, will face the region’s highest debt-rollover ratio this year at 65 percent of the economy and will contribute $1.82 trillion, or 72 percent, to gross borrowing in the region. China, also rated AA-by S&P, will account for $278.3 billion in 2014, or 11 percent, the company said.

Australia, which holds the top credit score from S&P, will probably increase total borrowing to $74.5 billion this year from $57.5 billion in 2013. New Zealand, whose rating was lowered one step to AA in 2011, will cut borrowing by more than half from last year to $4.2 billion in 2014, S&P estimates show.

Gross commercial long-term issuance by South Korea, which holds an A+ score, will more than double to $100.6 billion this year, the ratings company said.

To contact the reporters on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net

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