FOR YEARS, ASIA’S high-yield debt market has been a nearly market, offering early promise only to fade later in the investment cycle. Last year all that changed. According to JPMorgan, Asian high-yield issues returned 11.45% in 2006, comfortably beating 10-year US treasury bills and investment-grade corporate and emerging market bonds. New issuance from Asia excluding Japan and Australia hit a record $7.7 billion (see chart), fuelled by foreign investment flows into the region and ample local liquidity. The market’s performance was all the more impressive since it withstood some stiff challenges, including a nuclear test by North Korea, a coup in Thailand and the bankruptcy of Chinese high-yield borrower Ocean Grand.
This year is already promising even more than 2006. Credit conditions remain benign and the perceived global credit default risk, which JPMorgan calculates at just 2%, remains low. Add to that the positive...
