Asian emerging market local bonds offer lower yields than Latin American or Eastern European peers, but the region's stability, reforms and shock resilience are boosting its appeal for global investors.
With yields elevated, currencies stabilising and liquidity improving, Asian local currency bonds are drawing greater attention as investors diversify away from dollar assets.
Despite fiscal strains in developed markets, Asian investors continue to favour sovereign debt. Managers say allocations remain stable, though yield dynamics and sector fundamentals show where flows could shift if preferences change.
US Treasuries now carry a visible fiscal risk premium, skewing comparisons with corporates. In Asia, healthier fiscal anchors keep spreads more grounded, according to investors.
Global investors are reassessing their reliance on dollar-denominated assets as fiscal strains, tariffs and political uncertainty weigh on the currency, with Asian bonds emerging as a structural alternative.
Asia's sustainable bond strategy is evolving beyond simplistic green labels to focus on financially material climate risks and transition finance opportunities, according to industry experts.
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