Asian bonds

17 September 2026, 21:00 UTC Chief Investment Office GWM Investment Research

Asian bonds CIO View: Asian bonds Adrian Zuercher, Head CIO Global Asset Allocation, UBS AG Hong Kong Branch Chun Lai Wu, Head CIO Asia Asset Allocation, UBS AG Hong Kong Branch Kasey Wang, CFA, Strategist, UBS AG Hong Kong Branch Christy Yuen, Strategist, UBS AG Hong Kong Branch

• Asia credit continues to show resilience despite interest rates Global Asset Class Preference Attractive rising globally. JACI composite • Asia investment-grade credit remains an Attractive core 14 Sep 26 83.0 holding in a high-quality bond portfolio over a multi-year horizon, offering mid-single-digit yields and supported by strong Dec 26 95.0 fundamentals, including continued improvements in rating migration Jun 27 95.0 and historically low distress ratios. Source: JPMorgan, UBS. Note: Under JPMorgan's revised index methodology, • Asia high-yield credit remains an Attractive asset class, having the official JACI spread measure has changed from delivered a return of close to 5% year to date. Over the next 12 blend spread to duration-weighted spread-to-worst. months, we expect Asia HY to deliver mid- to high-single-digit returns and view it as a compelling addition to investors’ core investment- grade portfolios.

JACI composite spread December 2026 target: 95bps; June 2027 target: 95bps • Attractive: Asian credit, Asian investment grade, Asian high yield Asia credit continues to show resilience. Year to date, Asia credit has generated a slightly positive return, with the JACI Composite Index • Neutral: Asian local currency bonds, Chinese government bonds returning 0.2% as of 11 September. The higher-yield segment of Asia credit outperformed investment grade by more than 5 percentage points. Looking ahead, we maintain our Attractive view on both Asia investment- grade and high-yield credit, supported by mid- to high-single-digit yields, solid fundamentals, and a sector composition that is now better positioned to withstand external shocks.

Asia investment-grade credit remains Attractive. Despite the US five-year Treasury yield rising by more than 100bps year to date, Asian investment-grade bonds have declined only modestly, with the JACI Investment Grade Index delivering a total return of −0.5% as of 11 September. Unlike rate movements, which have been volatile this year, Asia IG spreads have remained stable, with the JACI Investment Grade spread (to worst, duration-weighted) staying around 60–70bps throughout the year. Although Asia IG spreads are at historically tight levels relative to the past 20 years, we believe significant widening is unlikely, given healthy regional macroeconomic conditions, continued improvements in ratings migration, and historically low distress ratios. The total yield offered by Asia IG bonds is attractive, with the JACI IG Index’s yield (to worst, duration-weighted) at 5.7%. Risks from rising interest rates should remain

This report has been prepared by UBS AG Hong Kong Branch. Please see important disclaimers and disclosures that begin on page 4.

manageable, as Asian IG bonds have an average duration of around four years and are therefore less sensitive to interest-rate movements than longer-duration bonds. Near-term developments in US inflation could continue to drive rate volatility, but we believe Asia IG bonds should remain a core holding in quality bond portfolios, offering attractive yield carry over a multi-year horizon.

Asia high-yield credit remains Attractive. Benefiting from relatively low interest-rate sensitivity and higher yields, Asian high-yield bonds remain one of the best-performing major fixed-income asset classes globally, with the JACI Non-Investment Grade Index returning 4.9% year to date as of 11 September. Compared with the investment-grade segment of the global USD bond universe, Asia HY bonds typically have a shorter duration of around three years and a higher yield carry of above 7%, making their total- return profile less sensitive to interest-rate volatility arising from geopolitical uncertainty and fiscal concerns. Asia HY credit is also well diversified across geographies and sectors, with bonds issued mainly by…