By Cecile Lefort
SYDNEY, Oct 7 (Reuters) - Australia may come under increasing pressure to tighten regulation in its A$413 billion ($296 billion) bond market as Asian peers adopt stricter international standards, making Australia's requirements look lax by global norms.
Regulators in Singapore, Thailand and Malaysia in September adopted common disclosure standards for companies seeking to sell securities, matching their regulatory requirements more closely to U.S. and European norms.
With more Asian countries expected to follow suit, lawyers warn that Australia could be forced to embrace similar changes as international borrowers and investors get used to, or require, the new standards.
"It would be a dissuading factor, particularly for non-Australian corporate borrowers, as the genuine speed to market and short, but effective, offering documents are part of what makes Australia attractive," said John Eagleton, a senior associate at law firm King & Wood Mallesons.
If Australia were to take the same regulatory path, however, it would lose its status as one of the world's easiest and quickest market for companies to raise debt.
Maintaining international competitiveness is vital for Australia's bond market as it strives to make up for its small domestic market by attracting frequent issuers.
Setting up a corporate debt issue in Australia can usually be completed in less than six weeks for A$60,000 in administrative costs and with fewer than 50 pages of information and documentation. In Europe and the U.S., by contrast, the process takes three months, costs more than A$350,000 and requires hundreds of pages of documentation.
Since the global financial crisis of 2008, regulators internationally have pushed for tighter standards and more standardisation across markets.
Those standards demand thorough historical financial statements, and the statutory descriptions of borrowers' business divisions and operations required are far more onerous than Australia's requirements.
Currently, Australian regulation favours borrowers over investors. Opponents say adopting tighter global standards without a real justification to do so could make Australia's small corporate bond market unnecessarily uncompetitive.
In overseas markets many issuers are high-yield or unrated borrowers, where the additional documentation is more relevant.
Another major difference is that professional investors buy most Australian-issued bonds, whereas retail investors dominate in some European bond markets, for example.
While acknowledging the pressure to follow international norms, many Australian debt financiers argue a stricter regime is unnecessary because most borrowers in the Australian market are publicly listed and/or have an investment grade debt rating.
"We get the same information under the continuous disclosure regime if the issuer is listed. If it's a private company, we demand it from borrowers," said Phil Strano, a portfolio manager at Victorian Funds Management Corporation which has A$50 billion of assets under management.
($1 = 1.4223 Australian dollars)