APAC Credit Roundup Weekly Review: Week ended September 18

The Asia credit market was stable last week despite a relatively eventful week for fixed income. The Treasury curve bear flattened, adding a slight tailwind to credit returns, but this was mostly neutralized by 1bp of spread widening, resulting in modest returns of 0.02%. Investment grade spreads were unchanged at 65bp, while high-yield spreads moved 3bp wider. At 82bp, the JACI is at the tighter end of its range and close to all-time tights, though further increases in Treasury yields are likely to cap returns this year. Asia outperformed EM peer indices but lagged the U.S., with the JACI beating the CEMBI Broad and the EMBIG. The Fed raised rates by 25bp to 3.75-4.0%, its first hike since July 2023, and the Bank of Japan also increased rates by 25bp. Primary issuance fell to US$2.35bn, bringing YTD supply to US$139bn, 2.1% behind the same period last year. China IG posted the best weekly performance in Asia IG (+0.19%), while China HY Property and Industrials pulled back;