In March, the ICE BAML Asia ex-Japan $ IG index (ADIG) widened 6 bp to 68 bp, and generated negative excess/total returns of -0.18%/-1.78% (YTD: -0.54%/-0.43%); BBB rated credits were hit the hardest, notably by issuers from countries vulnerable to energy shocks such as Indonesia, the Philippines, India, and South Korea; meanwhile, the ICE BAML Asia ex-Japan $ HY index (ADHY) widened by 64 bp to 386 bp, generating negative excess/total returns of -2.26%/-3.17% (YTD: +41 bp; excess/total returns: -0.54%/-0.30%); with the CC and long-end underperforming.

In March, our Asia IG core picks widened by 6 bp (Asia IG index: +6 bp); the performance was dragged lower by our picks of Australia and New Zealand Tier 2 bonds, Japanese financials, Hong Kong property perps, as well as Indonesia quasis (PERTIJ) and Macau gaming (SANLTD); meanwhile, our call to Overweight Greater China $ credits worked out, including our picks in China tech, China SOE hybrids and A-rated HK property credits.

Our Asia HY core picks widened by 181 bp (Asia HY index: +64 bp), dragged by our single-B picks in Indian NBFIs, China industrials, and Mongolian banks; meanwhile, our BB picks of Thai bank Tier-2s and corporate hybrids as well as Indian corporates held up well; our Asia HY pans widened by 49 bp.