The Model Portfolio: June: Modest spread widening; strong supply led by Japan

Research evidence excerpt

The Model Portfolio: June: Modest spread widening; strong supply led by Japan

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The Model Portfolio

June: Modest spread widening; strong

supply led by Japan

Credit Analysis

Modest spread widening, higher rates 03 July 2026

After the strong compression in April/May, APAC IG widened 2bp MoM to 66bp in June, Global Emerging Markets | Corporate

APAC HY widened 11bp MoM to 297bp. Within IG, Indo IG underperformed the most Credit

Asia(+11bp MoM) due to the macro and FX concerns, followed by Malay IG (+7bp MoM),

India IG (+5bp MoM) due to potential pick-up in supply, while Korea and Singapore were Table of Contents

resilient. Within HY, China HY widened the most (+53bp MoM), followed by Indo HY

(+18bp MoM), India HY (+17bp MoM), while Australia HY outperformed (-4bp MoM), and Returns 2

Japan HY was resilient (flat MoM). Rates moved higher in June, with the 5-year U.S. Valuation 6

Treasury yield rising by around 10bp from end-May. All in, APAC credit delivered broadly Where is value showing up today 9

flat returns in June. Year-to-date, APAC IG/HY saw total returns of +0.9%/+3.1%, driven Defaults 11

by carry and spread compression, partially offset by higher US treasuries. Supply 11

Overall, we now prefer HY over IG, given decent spread pick-up over US, less duration Fund flows 15

risks, and stronger technicals. Year-to-date, APAC HY outperformed US HY and EMEA Top and bottom10 performers 16

HY, but underperformed LatAm HY. Currently, APAC HY provides c.20bp pick-up over US Index rebalancing 18

HY, in-line with EMEA HY, while trading 25bp tighter than Latam HY. The model portfolio 19

Index rebalancing: net increase of US$9bn Research Analysts 29

US$14.9bn/23.8bn were removed from/added to the APACDOL index. See rule inside.