The US bank has is no longer negative on the asset class in Asia and, within this space, likes area such as Hong Kong property, India and Macau gaming.

The private banking arm of JP Morgan has turned less negative on Asian high yield debt, arguing that refinancing pressure and a reopening of capital markets has encouraged it to make the move. 

The US firm has hiked its stance on this debt class to neutral, it said in a note yesterday. 

“Asia high yield has endured a difficult period, marked by widespread defaults and capital market closures,” John Li (pictured below), head of Asia fixed income credit strategy, said. “Today, three factors support a more balanced view: a light 2026 maturity wall, the reopening of capital markets, and an attractive yield pickup over emerging market corporates. Together, these point to more normalised credit conditions and a turning of the corner for the asset class.”
 

John Li

“Default rates have clearly peaked. After three consecutive years above 10 per cent, they dropped to 5.3 per cent in 2024 and 3.5 per cent in 2025. Our base case for 2026 is 2-3 per cent, suggesting manageable refinancing pressure and positive total return potential,” he added.

A year ago, New York-headquartered Muzinich & Co argued that demand for most forms of corporate credit, particularly the higher yielding end of the spectrum, would continue to attract interest from groups such as wealthy individuals. 

Only 2 per cent of index debt matures in 2026, the bank said. Also, issuance rose to $179 billion last year, with “strong momentum” into 2026. 

After three years of losses, Asia high-yield delivered +12.4 per cent in 2024 and +9.5 per cent in 2025, JP Morgan’s Li said. 

Within the overall Asian high yield category, JP Morgan Private Bank singled out areas such as Hong Kong real estate (stabilising on lower rates, equity rebound, and renewed mainland demand); Indian high yield (supported by long-term growth and improving fundamentals); Macau gaming credits (benefiting from successful refinancing and tourism recovery); and it prefers BB-rated credits with stronger balance sheets.