Top UBS Fund Manager Says Asia Junk Bond Rally Has Further to Go

Asian junk bonds are poised to rally again this year and extend their outperformance over US peers, as lower leverage keeps default risks in check, according to a top regional investor.

The bullish view is driven largely by attractive valuations and a recovery in Asian credit fundamentals, Raymond Gui, head of Asia fixed income portfolio management at UBS Asset Management, said in an interview. Many Asian companies have used favorable funding conditions in recent years to cut debt or refinance maturing dollar bonds with longer-dated issues or domestic borrowings, he added.