The emerging East Asian local currency ( LCY ) bond market amounted to US$30.6 trillion at the end of 2025 as the issuance during the year rose to US$12 trillion from the previous year, according to a recent report.

The 2025 issuance was up from US$10.7 trillion in 2024 on the back of accommodative monetary stances, finds the latest issue of Asia Bond Monitor published by the Asian Development Bank on March 11.

The increment comes as the bond market expansion rate slowed to 2.1% in the fourth quarter from 3.2% in the previous quarter on reduced issuances for both government and corporate bonds. Issuance of government bonds contracted 22% in the fourth quarter of 2025, following a 1.1% growth in the third quarter as the majority of the governments in the region had already fulfilled most of their annual borrowing plans in prior quarters.

China remained as the main driver of the emerging East Asian LCY bond market expansion, accounting for 81.7% of the regional bond stock at the end of December. The aggregate bond stock of the Asean ( Association of Southeast Asian Nations ) member economies amounted to US$2.7 trillion – or 8.8% of the regional total – and their combined issuance in the fourth quarter of 2025 amounting to US$659.8 billion contributed 22.8% to the total quarterly issuance in the region.

Government bonds outstanding amounted to US$19.9 trillion at the end of 2025, with most regional governments front-loading their annual issuance in earlier quarters and reduced issuance in the fourth quarter of the year.

China government bond issuance, which comprised 86.6% of the region’s government issuance volume in the fourth quarter of 2025, contracted 22.6%, due to reduced issuance of local government bonds and policy bank bonds. Local governments had fulfilled most of their annual quotas in prior quarters and the policy banks had previously accelerated their bond issuance ahead of the reimposition of the value added tax on interest income in August.

The Philippines saw an uptick in its government bond stock due to a smaller volume of maturities, while that of Vietnam expanded at an accelerated pace as the government continued issuance to meet its 2025 target.

Corporate bonds outstanding, on the other hand, reached US$10 trillion, posting a slower expansion of 2.3% in the fourth quarter due to reduced issuance in China over economic uncertainty and a large volume of maturities in Korea and most Asean economies. Vietnam’s corporate bonds outstanding rose 7% quarter on quarter, fuelled by robust issuance as firms refinanced their maturing debt.

The intra-regional debt sales in emerging East Asia rose to US$17 billion in the fourth quarter of 2025 from US$14.3 billion in the previous quarter, bringing the total full-year issuance to US$52.1 billion. This was up 20% from US$43.4 billion in 2024 with the fourth quarter increase bolstered by the higher debt sales in Hong Kong ( US$13 billion ) and Korea ( US$1.1 billion ), as well as by the return of Malaysia ( US$900 million ), Indonesia ( US$900 million ), Thailand ( US$100 million ) and Vietnam ( US$20 billion ).

Issuers from Hong Kong dominated the East Asia intra-regional bond market, accounting for 76.6% of the total volume. The Chinese yuan remained the primary currency of choice among the intra-regional bond issuers in the fourth quarter of 2025, accounting for 84.8% of the total, while Hong Kong dollar-denominated bonds accounted for 11.8%, down from 25.3% in the third quarter of the year.

Corporate bonds accounted for 90.9% of total emerging East Asian intra-regional bond issuance in the fourth quarter, largely driven by the financial ( 39% ) and transportation ( 30.3% ) sectors. China Merchants Group was the region’s leading intra-regional issuer, with an aggregate issuance of 28 billion yuan ( US$ 4.06 billion ).

In terms of sustainable bonds, the intra-regional issuance amounted to US$2.5 billion in the fourth quarter of 2025, up from US$1.4 billion in the previous three months. There were six green bond issuances from Hong Kong totalling 14.7 billion yuan. Korea Expressway Corporation issued sustainability bonds worth HK$2 billion ( US$255.62 million ). Thailand returned to the intra-regional bond market for the first time since March 2023 via Muangthai Capital, which issued a dual-tranche social bond totalling S$129 million ( US$101.33 million ).

Despite this growth, the issuance in the intra-regional bond market remained dominated by conventional instruments, which accounted for 85.6% of total issuance in the fourth quarter of 2025.