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Following the recent Asian economic rebound from COVID-19 lows,
the global fixed income investment community has shown increased
interest in Asian (ex-Japan) USD corporate credit. Supportive
spread differentials and other risk-return attributes may make this
hard currency asset class an attractive potential addition to fixed
income and multi-asset portfolios.
This article profiles the iBoxx USD Asia ex-Japan
Corporates index to explore the Asian (ex-Japan) US dollar
credit market's:
Historical development
Composition across geographies, maturity, sector, and
rating
Yields, spreads, and durations
Historical returns, volatility, and other performance
metrics
Potential diversification benefits for global investors
Throughout, comparisons are made versus the global USD and EUR
corporate credit markets to provide context for both global and
regional investors.
Key observations indicate that the market can offer:
Generally higher comparative yields and spreads
Shorter relative duration
Some portfolio diversification
Significant exposure to China and EM risk
We also glance at the wider iBoxx/iTraxx credit ecosystem in
Asia that includes a nascent ETF market and a developing
derivatives landscape.
Posted 24 September 2021 by Rahul Sharma, Director - Indices, IHS Markit and
Wilson Mak, Analyst - Indices, S&P Dow Jones Indices
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
