Primary Markets

Global macroeconomic conditions in 2024 were challenging, driven by electoral cycles, geopolitical instability and high levels of debt; however Primary Markets themselves remained robust. ICMA’s primary market committees and working groups remain crucial forums for market participants to discuss the influence of conditions on market practice, access to markets and liquidity, while also engaging across a range of regulation affecting primary markets.

For years largely dominated by the wholesale institutional market, there is an emerging resurgence of retail interest in bond markets. This follows the post-Covid rise in interest rates from historic low as well as increased sovereign issuance, the EU’s ambition for its citizens to save and invest for retirement and the UK FCA’s upcoming consultation paper on debt offerings to retail investors.

In terms of regulatory activity, ICMA maintained a strong focus on proposed changes to prospectus disclosure. In the EU, changes are being brought about by adoption of the EU Listing Act and ESMA’s consequent consultation on various aspects of the changes - while in the UK the FCA has consulted on the new UK prospectus regime (to replace by 2025 the legacy EU prospectus regime adopted in the UK post-Brexit). ICMA also focused on the EU Listing Act’s market sounding regime alleviation, the EU Retail Investment Strategy (including reviews of the PRIIPs, MiFID product governance and MiFID inducement regimes) and the incoming UK CCIs regime (that will replace the current UK PRIIPs regime) – as well as on any primary market considerations arising from the secondary trading move to T+1. In Asia, ICMA convened members to agree updated templates relating to Hong Kong bookbuilding & placing code and standard wording regarding Singapore’s rules on the contractual recognition of resolution stay powers. Members also continued to focus on Hong Kong’s adoption of a dedicated market soundings regime.

The transition from LIBOR to risk-free rates was successfully completed in 2024, with the final GBP LIBOR settings ceasing on 28 March 2024 and the final USD LIBOR settings ceasing on 30 September 2024. Transition to risk-free rates continues elsewhere however, such as in South Africa, where JIBAR is expected to transition to ZARONIA in line with the official timeline for JIBAR’s cessation, which is currently expected to be the end of 2026.

Sustainability continues to be a key theme, with an ongoing ICMA focus on developments in the EU (such as the EU Green Bond Standard and aspects of the Listing Act’s prospectus provisions) and in the UK (such as the FCA’s anti-greenwashing rule guidance and as a part of the new prospectus regime) and their effect on issuance of sustainable finance instruments. ICMA’s release of a paper on the role of commercial paper (CP) in the sustainable finance market, which outlines how sustainable CP can serve as an important short-term funding mechanism in support of long-term environmental, social, and governance objectives, was welcomed as an enabler to progress in this market. Elsewhere, much focus was placed on potential policy initiatives in CP via ICMA’s response to the NBFI Consultation.

In the EU, there has been heightened focus on relaunching the securitisation market as a part of the objectives of CMU, among other things. ICMA joined with other trade association in supporting changes to EU Securitisation Regulation Article 7 templates earlier in the year. ICMA also convened a joint sell-side/buy-side Securitisation Taskforce to respond to the EU’s consultation on its securitisation framework this December (see [AMIC] section for more information).

While much of the market remains cautious yet curious on the potential of DLT, the rapid advancement of AI is transforming workplace efficiency in myriad ways. Innovation in primary markets will need to keep pace, with ICMA collaborating with members to explore the practicalities and scope for innovations in marketing, book-building and settlement processes.

Primary markets work across Asia Pacific

ICMA led the bond market response to the now finalised Hong Kong SFC consultation on market soundings, with the final rules being significantly revised based on ICMA feedback to reduce the potential negative impact on investors. ICMA also continues to lead international DCM market practice in the implementation phase of the SFC bookbuilding code.

ICMA’s global market practice work is increasingly relevant to regional stakeholders. At the request of the Hong Kong Monetary Authority and Securities and Futures Commission, ICMA has been invited to participate in the Debt Issuance WG and Bond Trading and Repo WG of their newly formed Fixed Income and Currencies Task Force to advise on the development of Hong Kong’s fixed income markets, including cross-border Chinese markets and offshore RMB.

Our annual Asian international bond markets study report published in March–conducted with the support of the HKMA–is now the leading study on the topic and provides global market stakeholders with a detailed overview of bond market structure and issuance trends across Asian jurisdictions.

Contact: ICMAPrimaryMarkets@icmagroup.org