According to November issue of Asia Bond Monitor, published by the ADB, outstanding local currency bonds in East Asia stood at $4.2 trillion at the end of September 2009, up 14.8 per cent over 12 months.
The figure was nearly eight times more than at the end of 1996 and shortly before the onset of the Asian financial crisis.
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ADB attributed the increase to the growing role of local currency bonds as a recent source of funds for companies and governments to support economic stimulus packages and market reforms.
The region needed to broaden further the investor base, strengthen market infrastructure and put in place a sound regulatory framework to facilitate fixed income markets to assume their full role in the region's economies.
East Asia comprising China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam, currently make up around six per cent of the global bond market.
However, this is still well below Japan's 17 per cent and over 42 per cent for the United States.
ADB said growth in emerging East Asian bond markets were particularly strong outside China where markets were 16 per cent larger than at the end of September 2008.
Growth in the Chinese bond market moderated to 13.9 per cent, year-on-year, in the third quarter from 14.8 per cent in the April to June period.
Hong Kong recorded the sharpest growth rate in the region's markets growing 39 per cent, versus a year earlier, due to significant issuance of Exchange Fund Bills and Notes for monetary purposes.
The growth was also attibuted to two large sales of new Special Administrative Region issues to aid local market development.
The Indonesian local currency bond market expanded 18.1 per cent while the Singapore dollar bond market grew 17.3 per cent.
Government bond issuance grew fastest in Hong Kong, Korea and China while corporate issuance expanded the most in Vietnam, Indonesia and China.
