The US Federal Reserve’s dovish stance and European Central Bank monetary easing have not only compressed their regions’ corporate credit spreads but also those in Asia, creating pockets of value.
Since the summer of 2013, corporate credit spreads of US dollar bonds issued by investment-grade Chinese issuers have underperformed against their US and European peers.
A few domestic factors contributed to this phenomenon, including China’s struggle with shadow banking, mounting local government debt and short-term interbank liquidity crunch.
But many investors believe the performance of the asset class is set to rebound over the next six months. “The underperformance of US dollar bonds issued...
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