EM monthly - A safe port in a storm: the resilience of Asian credit

May 14, 2026

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Asian credit is defying a challenging global backdrop, standing out as a source of relative strength. Mel Siew discusses what’s driving resilience in today’s market.

Despite a backdrop of heightened geopolitical tension and rising energy prices, Asian credit has emerged as a standout performer within global markets. This resilience is somewhat counterintuitive given the region’s perceived vulnerability to energy shocks, yet it highlights the growing importance of underlying technical and structural drivers.

Performance drivers

In an environment dominated by geopolitical volatility, investment grade corporate credit has proven extremely resilient, with credit spreads returning to similar or even tighter levels since US-Middle East hostilities began at the end of February.¹ 

By region, Asia and Latin America have been the best performers (Figure 1). Latin America’s resilience should not come as a surprise given its large exposure to commodities, although the spread performance is somewhat distorted by the technical effect of March’s downgrade of a large Brazilian bioethanol producer.

What is more surprising, especially given its perceived vulnerability to the energy shock, is the strong performance of Asia investment grade (IG), especially versus US and European developed market credit.

Figure 1 – Outperformance of Asia IG

Past performance is not a reliable indicator of current or future results.

Source: ICE Index Platform, as of 30th April 2026. See index descriptions on page. 10 for full index names. Period runs from 27th February to 30th April 2026. For illustrative purposes only.

Some of this outperformance can be attributed to the underlying composition. The US IG market has a significantly longer duration (6.5yrs) than Asia’s 4.5yrs. As global rates sold off in April in anticipation of the oil price shock leading to higher inflation, longer duration asset classes were hit the hardest.

Geography also played a part, at least initially, with EMEA and European IG credit spreads widening significantly in March given their proximity to the Middle East. However, as tensions eased, spreads returned to pre-conflict levels.

Technical support

EM and Asian credit continues to have a strong technical backdrop, characterised by robust investor demand, limited net supply and improving credit quality, which together have underpinned spread resilience. Year-to-date net issuance in global EM is flat, while Asia, particularly China, is heavily negative (Figure 2).

Figure 2 – Strong technical

There is also significant support for Asian credit from the demand side. Chinese domestic foreign currency deposits have been steadily increasing, most noticeably in the past two years. Meanwhile, Chinese domestic foreign currency loans have been declining (Figure 3). This accelerated in 2022 and coincided with the start of the Federal Reserve’s rate hiking cycle. The main source of this deposit growth has come from the export earnings of Chinese companies, which have reached new highs despite trade tension with the US (Figure 4).

Figure 3 – China FX funds source domestic deposits

Source: People’s Bank of China and Bloomberg, as of 31st March 2026. CHBAXDD Index – China FX Funds Sources Domestic Deposits. CHBAFRTD Index - China Total Domestic FX Loans. For illustrative purposes only.

Figure 4 – China’s trade balance

Source: Bloomberg, as of 31st March 2026. For illustrative purposes only. ECOYBCNN. International trade and balance of payments, international trade balance (nominal/value) monthly. 

At the same time, and over the same period, Chinese onshore rates have been declining (Figure 5). Given a choice, companies would therefore prefer to pay down costlier foreign currency loans.

Figure 5 – Declining onshore rates

Source: Bloomberg, as of 31st December 2025. CHLRLPR1 – China Loan Prime Rate 1 Year. FDTR Index – Federal Funds Target Rate – Upper Bound. For illustrative purposes only. Indices selected represent best proxy for subject under discussion. Latest data available used.

These excess deposits, which sit on the balance sheet of Chinese banks, provide a source of local demand for Asian dollar denominated credit. The strong export performance has mainly come from the semiconductor, auto, battery and solar sectors, all sectors in which China has a strong, if not leading, position.² This will likely support the continued generation of foreign currency deposits which will in turn provide support to the Asian US dollar fixed income market.

Tight credit spreads in certain parts of Asian IG are indicative of where that demand has gone.  A meaningful share of holdings in China, Taiwan and Hong Kong in the Asian IG index have a G-spread (government spread) of <20 (Figure 6). This provides an anchor for the overall universe, in addition to the supportive supply backdrop that has been in place since 2022.

Figure 6 – G-spread of Asian IG

Source: ICE Index Platform, as of 5th May 2026.  ICE BofA Asian Dollar Investment Grade Corporate Index (ACIG). For illustrative purposes only.

As investors search for higher spreads and yields, we believe this should also be supportive for Asian high yield. The spread pick-up for Asian BBs over Asian BBBs has recovered to the level of 27th February (the day before the Iran/US conflict began). This still represents value over the equivalent BB-BBB US spread, which is tighter. This same trend is apparent in the Asian B-BB spread which is +35bps wider than 27th February, while the US B-BB spread is -9bps tighter (Figure 7).

Figure 7 – Spread pick up in Asia high yield

Source: ICE Index platform, as of 4th May 2026. Indices used: ACH1, AC4G, J0A1, C0A4. See index descriptions on page 10 for full index names. Indices used represent best proxy to illustrate sub-asset classes under discussion. Index performance is for illustrative purposes only and you cannot invest directly in an index.

Source: ICE Index platform, as of 4th May 2026. Indices used ACH2, ACH1, J0A1, J0A2. See index descriptions on p. 10 for full index names. Indices used represent best proxy to illustrate sub-asset classes under discussion. Index performance is for illustrative purposes only and you cannot invest directly in an index.

We believe the resilience of Asian investment grade credit reflects not only a favourable market conditions but is underpinned by a strong combination of technical support, improving credit quality and sustained demand from domestic liquidity. While tight spreads in parts of the market highlight increasingly rich valuations, they also act as an anchor for the broader asset class. As investors continue to search for yield, this supportive backdrop is likely to extend into higher beta segments, particularly Asian high yield where relative value remains more compelling. Overall, despite ongoing geopolitical and macro uncertainty, we believe Asia credit appears well positioned to continue to offer an attractive investment opportunity within global corporate credit.

EM look back – April

• April was a strong month for investors, as price action reversed many of the worst-case scenarios that had been priced in during March. Corporate credit delivered positive total returns across the board, with spread tightening serving as the primary driver of performance. Emerging markets high-yield credit stood out relative to other credit sub-asset classes. In contrast, US investment-grade credit underperformed both in total return and in spread compression, partly reflecting a more limited rebound following March’s drawdown.
• Within emerging markets, the tone was clearly risk-on. Sovereigns slightly outperformed corporates, largely due to their greater exposure to frontier markets, with countries such as Ukraine, Sri Lanka and Ecuador leading performance. In corporate credit, lower-quality segments outperformed: single-Bs led within high yield, while BBBs showed relative strength within the investment-grade universe. Spreads tightened most sharply at the front end of the curve, making short-duration credit the strongest performer from a spread-compression perspective.
• Regionally, EMEA was the top performer in high yield, driven by Middle Eastern homebuilders and African energy names, with spreads tightening by 67bps over April. In investment grade, Latin America delivered the strongest total returns, supported by long-duration Mexican corporate credit. At the sector level, real estate and basic industry exhibited the sharpest mean reversion, while more defensive sectors such as financials lagged, although spreads tightened across all sectors.
• Asia saw a more active month than usual for sovereign rating actions, alongside supportive macro and sector developments. Most notably, Moody’s revised the outlook on China’s A1 rating to stable from negative, citing progress in higher value-added sectors and strong domestic funding capacity, coinciding with better-than-expected Q1 GDP growth of 5% driven by exports in electronics and autos. Thailand also saw its outlook upgraded to stable, reflecting easing trade headwinds and improved political stability, while Fitch revised the Philippines to negative due to weaker public investment and energy sensitivity. Regionally, Japan pledged US$10bn to support Asian energy security, while geopolitical engagement intensified with Indonesia strengthening ties with both the US and Russia. Meanwhile, continued AI-driven demand supported strong earnings and record performance across the semiconductor sector.
• In line with the risk-on backdrop and constrained issuance through March, supply rebounded in April, with corporates printing US$37.2bn versus US$30.9bn in April 2025, bringing year-to-date supply to US$171.8bn – still trailing last year’s pace at this point. Notably, the first quarter is typically the heaviest issuance period due to front-loading. Quasi-sovereigns were the largest issuers, accounting for 37% of supply, followed by investment grade at 34%. Regionally, Asia contributed 35% of issuance, broadly in line with 2025 levels, while the increase versus last year was driven by EEMEA and Latin America. Financials dominated sector issuance, raising close to US$18bn – well above last year’s levels – with the 3–5-year tenor remaining the preferred maturity bucket.

Past performance is not a reliable indicator of current or future results.

Credit

Past performance is not a reliable indicator of current or future results.

Source: ICE data platform. as of 30th April 2026. EMGB - ICE BofA Emerging Markets External Sovereign Index EMCB - ICE BofA Emerging Markets Corporate Plus Index,  EMIB - ICE BofA High Grade Emerging Markets Corporate Plus Index, EMHB - ICE BofA High Yield Emerging Markets Corporate Plus Index, Q690 - ICE BofA Custom Emerging Markets Short Duration Index, EMRA - ICE BofA Asia Emerging Markets Corporate Plus Index, EMIA - ICE BofA High Grade Asia Emerging Markets Corporate Plus Index, EMHA - ICE BofA High Yield Asia Emerging Markets Corporate Plus Index , EMRL - ICE BofA Latin America Emerging Markets Corporate Plus Index, EMIL - The ICE BofA High Grade Latin America Emerging Markets Corporate Index, EMHL - ICE BofA High Yield Latin America Emerging Markets Corporate Plus, EMRE - ICE BofA EMEA Emerging Markets Corporate Plus Index, EMIE - ICE BofA High Grade EMEA Emerging Markets Corporate Plus Index, EMHE - ICE BofA High Yield EMEA Emerging Markets Corporate Plus Index,. Index performance is for illustrative purposes only. You cannot invest directly in the index. Indices selected provide best proxy for highlighting performance of emerging market corporate bonds. For illustrative purposes only. 

Market Data

Yield to Worst

Source: ICE data platform. as of 30th April 2026. EMGB - ICE BofA Emerging Markets External Sovereign Index EMCB - ICE BofA Emerging Markets Corporate Plus Index,  EMIB - ICE BofA High Grade Emerging Markets Corporate Plus Index, EMHB - ICE BofA High Yield Emerging Markets Corporate Plus Index, Q690 - ICE BofA Custom Emerging Markets Short Duration Index, EMRA - ICE BofA Asia Emerging Markets Corporate Plus Index, EMIA - ICE BofA High Grade Asia Emerging Markets Corporate Plus Index, EMHA - ICE BofA High Yield Asia Emerging Markets Corporate Plus Index , EMRL - ICE BofA Latin America Emerging Markets Corporate Plus Index, EMIL - The ICE BofA High Grade Latin America Emerging Markets Corporate Index, EMHL - ICE BofA High Yield Latin America Emerging Markets Corporate Plus, EMRE - ICE BofA EMEA Emerging Markets Corporate Plus Index, EMIE - ICE BofA High Grade EMEA Emerging Markets Corporate Plus Index, EMHE - ICE BofA High Yield EMEA Emerging Markets Corporate Plus Index,. Index performance is for illustrative purposes only. You cannot invest directly in the index. Indices selected provide best proxy for highlighting performance of emerging market corporate bonds. For illustrative purposes only. 

 

All sources are Bloomberg unless otherwise stated.

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed by Muzinich & Co. are as of May 2026 and may change without notice.

References

1. ICE Index Platform, as of 7th May 2026. ICE BofA High Grade Asia Emerging Markets Corporate Plus Index (EMIA).
2. Muzinich & Co, as of 9th May 2025. Pole position: the rise of Asia’s EV industry.

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Index descriptions

EMGB - ICE BofA Emerging Markets External Sovereign Index tracks the performance of US dollar and euro denominated emerging markets sovereign debt publicly issued in the major domestic and eurobond markets.  Qualifying securities must have risk exposure to countries other than members of the FX-G10, all Western European countries and territories of the US and Western European countries.

EMCB - ICE BofA Emerging Markets Corporate Plus Index tracks the performance of the US dollar and euro denominated emerging markets non-sovereign debt publicly issued in the major domestic and eurobond markets. Qualifying issuers must have risk exposure to countries other than members of the FX G10, all Western European countries, and territories of the US and Western European countries.

EMIB - ICE BofA High Grade Emerging Markets Corporate Plus Index is a subset of the ICE BofA ML Emerging Markets Corporate Plus Index (EMCB) including all securities rated AAA through BBB3, inclusive.

EMHB - ICE BofA High Yield Emerging Markets Corporate Plus Index is a subset of the ICE BofA ML Emerging Markets Corporate Plus Index (EMCB) including all securities rated BB1 or lower.

Q690 - ICE BofA Custom Emerging Markets Short Duration Index tracks the performance of short-term US dollar and euro denominated emerging markets non-sovereign debt publicly issued in the major domestic and eurobond markets.

EMRA - ICE BofA Asia Emerging Markets Corporate Plus Index is the subset of the ICE BofAML Emerging Markets Corporate Plus Index, which includes only securities issued by countries associated with the region of Asia, excluding Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

EMHA – The ICE BofA High Yield Asia Emerging Markets Corporate Plus Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BB1 and lower with a country of risk within the Asia region.

EMIA -  The ICE BofA High Grade Asia Emerging Markets Corporate Plus Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BBB3 and higher with a country of risk within the Asia region.

EMRL - ICE BofA Latin America Emerging Markets Corporate Plus Index is a subset of The ICE BofA Emerging Markets Corporate Plus Index including all securities issued by countries associated with the geographical region of Latin America.

EMIL - The ICE BofA High Grade Latin America Emerging Markets Corporate Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BBB3 and higher with a country of risk within the Latin America region.

EMHL - ICE BofA High Yield Latin America Emerging Markets Corporate Plus is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated sub-investment grade based on the average of Moody's, S&P and Fitch, and with a country of risk associated with the geographical region of Latin America.

EMRE - ICE BofA EMEA Emerging Markets Corporate Plus Index is a subset of The ICE BofA Emerging Markets Corporate Plus Index including all securities issued by countries associated with the geographical region of Europe, the Middle East and Africa including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

EMIE - ICE BofA High Grade EMEA Emerging Markets Corporate Plus Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BBB3 and higher with a country of risk within the Europe, Middle East and Africa regions.

EMHE - ICE BofA High Yield EMEA Emerging Markets Corporate Plus Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BBB3 and higher with a country of risk within the Europe, Middle East and Africa regions.

The MSCI EM Index is a free-float weighted equity index that captures large and mid cap representation across emerging market countries. The index covers approximately 85% of the free float-adjusted market capitalisation in each country.

LDMP - ICE BofA Local Debt Markets Plus Index is designed to track the performance of emerging markets sovereign debt publicly issued and denominated in the issuer's own currency.

J0A0 - The ICE BofA ML US Cash Pay High Yield Index tracks the performance of US dollar denominated below investment grade corporate debt, currently in a coupon paying period that is publicly issued in the US domestic market.

J0A1 – The ICE BofA  BB US Cash Pay High Yield Index is a subset of the ICE BofA  US Cash Pay High Yield Index (J0A0) including all securities rated BB1 through BB3, inclusive.

C0C0A0 - The ICE BofA ML US Corporate Index tracks the performance of US dollar denominated investment grade corporate debt publicly issued in the US domestic market.

HE00 - The ICE BofA ML Euro High Yield Index tracks the performance of EUR dominated below investment grade corporate debt publicly issued in the euro domestic or eurobond markets.

ER00 – The ICE BofA ML Euro Corporate Index tracks the performance of EUR denominated investment grade corporate debt publicly issued in the eurobond or Euro member domestic markets.

ICE BofA High Yield Emerging Markets Corporate Plus India Issuers Index (EINH) - is a subset of ICE BofA Emerging Markets Corporate Plus Index

ADHY - ICE BofA Asian Dollar High Yield Index tracks the performance of sub-investment grade U.S. dollar denominated sovereign, quasi-government, corporate, securitized and collateralized debt publicly issued in the U.S. domestic and eurobond markets by Asian issuers.

ICE BofA BB Asian Dollar High Yield Index (ACH1) ICE BofA BB Asian Dollar High Yield Index is a subset of ICE BofA Asian Dollar High Yield Corporate Index including all securities rated BB1 through BB3, inclusive.

ADIG -  ICE BofA Asian Dollar Investment Grade Index tracks the performance of investment grade U.S. dollar denominated sovereign, quasi-government, corporate, securitized and collateralized debt publicly issued in the U.S. domestic and eurobond markets by Asian issuers. Qualifying securities have a country of risk classified as an Emerging Markets country that is part of the Asia/Pacific Region.

CEMBI Broad Div. Index - The JP Morgan CEMBI Broad Diversified Index (CEMBIB Div) is a benchmark that tracks the performance of US dollar-denominated, fixed and floating-rate debt instruments issued by emerging market corporate entities.

JESG CEMBI Broad Div. Index - The JP Morgan ESG CEMBI Broad Diversified Custom Maturity Index tracks liquid, US Dollar denominated emerging market fixed and floating-rate debt instruments issued by corporates.

EM3B – ICE BofA BB Emerging Markets Corporate Plus Index is a subset of the ICE BofA Emerging Markets Corporate Plus Index including ass securities rated BB1 through BB3, inclusive.

EMCS – ICE BofA Emerging Markets Corporate Plus Consumer Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities of Consumer Cyclical and Consumer Non-Cyclical issuers.

EMEN – ICE BofA Emerging Market Corporate Plus Energy Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities of Energy issuers.

EMRB – ICE BofA Emerging Market Corporate plus Real Estate, Building & Hotels Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities of Real Easte, Building & Construction, or Hotels.

EMCG – ICE BofA Emerging Markets Corporate Plus Capital Goods Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities of Capital Goods Issuers.

EMSD – ICE BofA Emerging Markets Diversified Corporate Index tracks the performance of USD dollar denominated emerging markets corporate senior and secured debt publicly issued in the US domestic and eurobond markets.

EMTM – ICE BofA Emerging Markets Corporate Plus Media & Telecommunications Index is a subset of ICE BofA Emerging Markets Corporate Plus index including all securities of media and telecommunications issuers.

EM2B – ICE BofA BBB Emerging Markets Corporate Plus Index is a subset of the ICE BofA Emerging Market Corporate Plus index including all securities rated BBB1 through BBB3, inclusive.

EMUT – the ICE BofA Emerging Markets Corporate Plus Utility Index is a subset of the ICE BofA Emerging Markets Corporate Plus Index including all securities of Utility issuers.

EMPB – ICE BofA Public Sector Issuers Emerging Markets Corporate Plus Index is a subset of The BofA Emerging Markets Corporate Plus Index including all quasi-government securities as well as debt of corporate issuers deemed to be government owned or controlled.

ACIG – ICE BofA Asian Dollar Investment Grade Corporate Index tracks the performance of investment grade US dollar denominated securities issued by Asian corporate issuers in the US domestic and eurobonds market. Qualyfying securities have a country of risk associated with Bangladesh, Bhutan, Cambodia, China, John Kong, India, Indonesia, Laos, Macau, Malaysia, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.

EMAB – Ice BofA Automotive & Basic Industry Emerging Markets Corporate Plus Index is a subset of the ICE BofA Emerging Markets Corporate Plus Index.

EMHE - The ICE BofA High Yield EMEA Emerging Markets Corporate Plus Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BBB3 and higher with a country of risk within the Europe, Middle East and Africa regions.

EMNS – The ICE BofA Non-Financial Emerging Markets Corporate Plus Index is a subset of the ICE BofA Emerging Markets Corporate Plus Index excluding all financial securities as well as debt of corporate issuers designated as government owned or controlled by ICE BofA emerging markets credit research.

EM1B – the ICE BofA AAA-A Emerging Markets Corporate Plus Index is a subset of the ICE BofA Emerging Market Corporate Plus Index including all securities rated AAA through A3, inclusive.

including all securities with India as the country of risk that are rated sub-investment grade based on average of Moody's, S&P and Fitch

ADOL -The ICE BofA Asian Dollar Index tracks the performance of U.S. dollar denominated sovereign, quasi-government, corporate, securitized and collateralized debt publicly issued in the U.S. domestic and eurobond markets by Asian issuers.

ICE BofA China Corporate Index (CN0C) ICE BofA China Corporate Index tracks the performance of CNY denominated corporate debt issued in the Chinese domestic bond market. Qualifying securities must have at least one year remaining term to final maturity, at least 18 months to final maturity at point of issuance, a fixed coupon schedule and a minimum amount outstanding of CNY 500 million. Callable perpetual securities qualify provided they are at least one year from the first call date. Fixed-to-floating rate securities also qualify provided they are callable within the fixed rate period and are at least one year from the last call prior to the date the bond transitions from a fixed to a floating rate security. Contingent capital securities (“cocos”) are excluded, but capital securities where conversion can be mandated by a regulatory authority, but which have no specified trigger, are included. Other hybrid capital securities, such as those issues that potentially convert into preference shares, those with both cumulative and non-cumulative coupon deferral provisions, and those with alternative coupon satisfaction mechanisms, are also included in the index. Securities in legal default are excluded from the Index.

ICE BofA Investment Grade Emerging Markets Corporate Plus China Issuers Index (ECNI) ICE BofA Investment Grade Emerging Markets Corporate Plus China Issuers Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities with China as the country of risk that are rated investment grade based on average of Moody's, S&P and Fitch. EMFN – EM Corporate Plus Financial is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities of financial issuers.

EMIE - The ICE BofA High Grade EMEA Emerging Markets Corporate Plus Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities rated BBB3 and higher with a country of risk within the Europe, Middle East and Africa regions.

EM4B – ICE BofA B & Lower Emerging Markets Corporate Plus Index is a subset of the ICE BofA Emerging Markets Corporate Plus Index.

EMRT – ICE BofA Emerging Markets Corporate Plus Transportation Index is a subset of ICE BofA Emerging Markets Corporate Plus Index including all securities of Transportation issuers other than airlines or railroads.

GSFCI - The Goldman Sachs Financial Conditions Index is a measure that assesses the overall financial conditions in the economy, taking into account various factors such as interest rates, credit spreads, and equity prices.

ICE BofA B Asian Dollar High Yield Index (ACH2) ICE BofA B Asian Dollar High Yield Index is a subset of ICE BofA Asian Dollar High Yield Corporate Index including all securities rated B1 through B3, inclusive.

ICE BofA Single-B US Cash Pay High Yield Index (J0A2) ICE BofA Single-B US Cash Pay High Yield Index is a subset of ICE BofA US Cash Pay High Yield Index including all securities rated B1 through B3, inclusive.

You cannot invest directly in an index, which also does not take into account trading commissions or costs. Additionally, indices do not include reinvestment of dividends, and the volatility of indices may be materially different over time.

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Muzinich and/or Muzinich & Co. referenced herein is defined as Muzinich & Co., Inc. and its affiliates. Muzinich views and opinions.  This material has been produced for information purposes only and as such the views contained herein are not to be taken as investment advice. Opinions are as of date of publication and are subject to change without reference or notification to you. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. The value of investments and the income from them may fall as well as rise and is not guaranteed and investors may not get back the full amount invested. Rates of exchange may cause the value of investments to rise or fall.

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