Emerging East Asia has seen steady growth in its local currency bond market, with the outstanding amount up 3% at US$28.6 trillion in the second quarter of 2025, according to the latest Asian Bond Monitor published by the Asian Development Bank ( ADB ).

With strengthened financial market indicators and a positive outlook, new issuance of LCY bonds reached US$3.1 trillion in the April-June period, representing a 4.8% growth from the previous three months. Issuance from government entities increased by 18.3% quarter-on-quarter, while that from corporate issuers rose by 25.2%.

China and South Korea drove the market expansion, accounting for nearly 90% of the region’s total LCY bond stock at the end of June, the report shows. Outstanding amount from Asean countries took 9.1% of the regional total.

Issuance of sustainable bonds also rose by 60.6% quarter-on-quarter to US$79.6 billion in Asean+3 (Asean plus China, Japan, and South Korea, surpassing the global and EU-20 growth rates. On balance, Asean+3 accounts for about 32% of the global sustainable bond issuance, with 75.6% of these issuances denominated in local currencies.

Similar to the overall emerging East Asia market, sustainable bond issuance in Asean+3 was also led by China and South Korea, which accounted for 57.2% and 18.5% of the market, respectively.

In terms of sustainable bond instruments, China dominated the Asean+3 green bond issuance, with a 78.5% share. South Korea showed a strong inclination towards social bonds, contributing 62.1% of the regional volume. Meanwhile, Asean economies favoured sustainability-linked bonds, making up 52.8% of the issuance in the region.

Finally, G3 bond issuance in emerging East Asia saw a moderate 1.1% growth to US$74.1 billion, largely driven by corporate bonds for capital investments, according to the ADB report.