Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley, interviews Kelvin Pang, Head of Asia Credit Strategy, about the state of Asian credit markets. Despite slower economic growth in Asia due to tariff uncertainty, credit spreads remain historically low due to negative net supply and relatively muted demand. Pang discusses a framework for the normalization of these technicals, predicting a shift as treasury yields and dollar funding costs decrease. The conversation also touches upon the attractiveness of local currency borrowing for Asian companies, the dim sum bond market, the ongoing challenges in the China property sector, and the potential for investors to capitalize on the disconnect between growth risks and low credit spreads by shifting to higher-quality credits and using the ITREX Asia X Japan CDS index to gain exposure to tariff uncertainty.
