Asian high-yield debt has become a surprising leader in global bond markets in 2026, driven by cheaper money in China which is bolstering issuer finances. These junk dollar bonds have delivered a 4.3% return so far this year, significantly surpassing the 2% return seen in their US counterparts.
This performance means Asian high-yield debt has outperformed two dozen other major global debt gauges during the same period. The outperformance has become even more pronounced over the last month as the yield gap between Chinese and US benchmark yields reached a record high. Chinese borrowers constitute the largest portion of these Asian notes.
This trend of outperformance for Asian high-yield bonds is not new. They have shown robust gains over the past two years, attracting investors due to solid yields, shorter maturities, and improving company finances. Raymond Gui, head of Asia fixed income portfolio management at UBS Asset Management, attributes this bullish view to attractive valuations and a recovery in Asian credit fundamentals. Many Asian companies have used favorable funding conditions to reduce debt or refinance with longer-dated issues or domestic borrowings.
According to Infomasional.com, Asia's junk bond market started 2026 strongly, with a key index of Asian high-yield debt up 1.8% after a 9.5% return in 2025. Since the end of 2023, it has outperformed US and euro-denominated junk bonds by 10 and 13 percentage points, respectively. Gui expects default rates for the region's junk bonds to remain below 1% by market value this year, contributing to continued strong performance.
