More bang for your buck?

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.

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Posted 24 September 2021 by Rahul Sharma, Director - Indices, IHS Markit and

Wilson Mak, Analyst - Indices, IHS Markit

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.

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