If 2025 was the year when local currency ( LCY ) bond markets demonstrated their resilience, 2026 is increasingly becoming the year in which investors are differentiating more sharply between markets, strategies and institutions.

Across the region, LCY debt has continued to attract investor attention despite geopolitical tensions, fluctuating commodity prices, and economic uncertainty. While periods of volatility have tested market sentiment, the broader investment case for LCY bonds remains intact, underpinned by attractive carry, improving liquidity conditions, and supportive domestic investor bases.

The latest data suggest that the asset class continues to evolve beyond its traditional role as a diversification tool. Investors are increasingly viewing LCY bonds as a core allocation, supported by a combination of healthy issuance activity, deepening market infrastructure, and the continued expansion of sustainable finance initiatives. A gradual shift away from US dollar funding has further strengthened regional debt markets, with issuers increasingly tapping local investor pools to meet financing needs.

Yet perhaps the most significant development has been the growing divergence between markets. Domestic policy decisions, fiscal discipline, and central bank credibility are playing a larger role in determining performance than in previous cycles. For investors, the era of treating Asia as a single macro trade is giving way to a more nuanced approach centred on active country selection, duration management, and currency positioning.

It is against this backdrop that the 2026 Asset Benchmark Research ( ABR ) Local Currency Bonds Benchmark Survey via The Asset App has recorded strong responses from market participants across the region. Here are some takeaways from this year’s engagement:

Outstanding attributes

Over the survey period, we had over 500 buyside individuals across the region who voted for their sellside counterparts, with close to half of buyside participants voting for three or more candidates. The introduction this year of our bi-weekly attribution topics has yielded some interesting results. When looking at research counterparts, buyside individuals valued attributes such as a sound track record, accessibility, and objective views. For sales, individuals needed to be speedy, intuitive, and capable of good coverage. Trading saw appreciation for those with a solid reputation, speed, and accessibility.

The most active markets comprised the Indian rupee, Indonesian rupiah, and offshore Chinese yuan. Most improved were those in the Singapore dollar and Hong Kong dollar markets, with activity in the latter increasing by 130% from 2025.

Driven by lower local funding costs and supportive policy initiatives, Hong Kong dollar-denominated bond issuances experienced a record-setting surge in 2025, rising 41% from the previous year to reach HK$613 billion ( US$78.22 billion ). This milestone was reached thanks to landmark government infrastructure tranches, local corporate returnees, and a push into tokenized digital debt.

Sellside engagement was also encouraging over the survey period, recording over 350 participants. Around 70% of them were very active, voting for three or more candidates among their buyside counterparts.  Top attributes for the Most Astute Investors were those who were technical, patient and creative. For trading, notable individuals were cited for their reputation in the market, accessibility and speed. Most active markets were seen in the Indonesian rupiah, offshore Chinese yuan, and Philippine peso. Most improved markets from 2025 were the Hong Kong dollar and Indonesian rupiah, which were growing at double-digit rates.    

We are grateful to the many investors, traders, analysts, and market professionals who took the time to participate in this year's survey. The level of engagement reflects not only the growing importance of the LCY bond as an asset class but also the industry's commitment to recognizing excellence among the individuals and institutions that help drive market development.

Enhanced voting features

This year's survey attracted strong participation from both the buyside and sellside communities, offering valuable insights into how market participants evaluate leadership, innovation, and service quality amid rapidly evolving market conditions. The robust response underscores the growing importance of independent benchmarking and peer recognition.

The introduction of enhanced voting features and more targeted attribution categories was also well received, enabling participants to recognize excellence across a broader range of capabilities. These refinements are intended to better capture the realities of a market that has become more sophisticated, more diverse, and is increasingly driven by specialist expertise.

As these markets continue to mature and attract a broader investor base, participant insights remain vital in promoting best practices, recognizing excellence, and supporting the development of one of the region’s most dynamic capital market segments.

Stay tuned for the second half of the year as we reveal the leading individuals and firms within the LCY bond ecosystem.

For additional inquiries, please reach out to LCY@theasset.com

To view the results from last year, please go here.