3 Questions with Zerlina Zeng: Asia USD Credit Resilience, 2026 Risks, and Positioning
Key takeaways from Fitch Group, Inc. ’s All Angles Forum 2025 on Asia USD credit performance, the 2026 risk map, and positioning strategies featuring Zerlina Zeng, CFA , Head of APAC Strategy at CreditSights .
At Fitch Group’s All Angles Forum 2025, Zerlina Zeng outlined how resilient Asia USD credits in 2025, supported by easing policies, normalizing HY defaults, and net negative supply, set the stage for a more cautious playbook in 2026. Zerlina highlighted US-led macro uncertainties, policy and geopolitical flashpoints, and stretched valuations as key watchpoints.
Below, we distill three questions top of mind for investors and how to prepare if credit spreads likely widen back toward normal.
Q1. How did Asia $ credits perform in 2025 and what are the key takeaways?
Despite US tariff uncertainties, rates volatility, and bouts of political instability, Asia $ IG and HY credits have been remarkably resilient, with spreads compressing to levels last seen in the 1970s. Asia $ credits also outperformed US and Euro peers in total returns. The resilience of Asia $ credits is supported by a benign macro backdrop on the back of monetary and fiscal easing measures, a normalizing Asia HY default rate, and unstoppable technical as net new supply remained negative. Our call for adding duration since 2Q25 has worked out as US Treasury yields declined and long-dated Asia $ credits delivered strong total returns.
Q2. What are the biggest risks to Asia $ credits in 2026?
We think that US macro uncertainties are the biggest risks to Asia $ credits in 2026. These include a potential re-acceleration of inflation, a significant deterioration in the US labor market, and a retreat of AI optimism. The Supreme Court ruling on the legality of Trump tariffs, the US mid-term elections, and US-China tensions are also key risks that we are watching out for.
Q3. How would you recommend investors position in Asia $ credits in 2026?
We think that Asia $ credit spreads are stretched, leaving limited buffer for macro, policy, and market uncertainties. We expect Asia $ credit spreads to mean revert and widen in 2026. We recommend investors focus on carry instead of spread compression and keep high-grade credits as core portfolio holdings. We would be selective when reaching down in the rating spectrum and focus on issuers with improving credit stories and/or potential price upside from LMEs. We also recommend investors diversify across markets and currencies to protect portfolio returns.
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