Asia Pacific Credit Update: APAC financials in June: Spreads hold firm despite surge in USD Supply

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Asia Pacific Credit Update: APAC financials in June: Spreads hold firm despite surge in USD Supply

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Asia Pacific Credit Update

APAC financials in June: Spreads hold firm

despite surge in USD Supply

Credit Analysis

Spread still at all-time tight amid 18bn new bonds printed 02 July 2026

As of end-Jun’26, the average OAS of Asia Financials, based on the APAC credit index Global Emerging Markets | Corporate

(APACDOL), came in at 78bp, unchanged MoM, and still at all-time-tight level. The heavy Credit

USD bond supply of c. USD18bn negatively impacted market sentiment with the higher Asia

yielding names largely underperforming. While the financials’ average OAS is still c.20bp Lefu Li, CFA

tighter than that of Industrials and Utilities bonds it still offers 28bp premium vs APAC Research Analyst

sovereign bonds. By capital structure, Australia AT1 tightened 6bp MoM to 109bp with Merrill+852 3508Lynch2142(Hong Kong)

one of the highest coupon fully redeemed in the month. The Japan AT1 tightened by 8bp lefu.li@bofa.com

MoM to 141bp but EM Asia AT1 underperformed peers with 4bp MoM widening with

new issue supply. In terms of tier-2 bonds, Australia and Japan saw 2bp/4bp widening

AbbreviationMoM with spread quoted at c.96bp. EM Asia tier-2 tightened 1bp MoM to 89bp, still

trading tighter than peers. For senior bonds, the spread widened 2bp MoM for three APACDOL: Asia Pacific Dollar Index

regions, with Australia senior trading at only 22bp, 37-40bp tighter than peers. In terms

of total returns, APAC Financials delivered a monthly return of 0.1%. AT1: Additional Tier-1

RBI to encourage USD issuance, USD3bn from India FIs AXSBIN: Axis Bank

In June’26, APAC financial sector saw strong USD bond supply. In the EM Asia space, the DM: Developed Markets