Goldman favours Asian high-grade debt again as growth risks rise
Asia investment-grade credit spreads widened by nearly six basis points on Aug 1, the most in four months, after the weaker-than-expected US jobs data
Published Mon, Aug 11, 2025 · 12:51 PM
Goldman Sachs has returned to a preference for investment-grade US dollar bonds over high-yield debt in Asia, citing worries about the US economy and expectations of a growth-friendly Federal Reserve.
“As US growth concerns have re-emerged and valuation at even more elevated levels compared with end-2024, we believe now is the time to switch back to an overweight Asia IG over HY positioning,” the bank’s strategists Kenneth Ho and Sandra Yeung wrote in a report dated Friday (Aug 8).
The move brings Goldman back to its stance toward the sector at the start of this year, after adopting a neutral position in May following a sell-off in credit spreads triggered by Donald Trump’s announcement of global tariffs. The return to a more cautious view reflects the re-emergence of broader concerns about the US growth momentum after the recent, surprisingly weak jobs data.
The defensive nature of investment-grade debt makes it attractive due to expectations of a dovish Fed, while any weakness in general credit markets will likely lead to an underperformance of the high-yield sector, Goldman’s strategists wrote.
Within the high-grade market in Asia, Goldman sees the most value in BBB-rated notes such as Hong Kong property developers and subordinated bank capital, as well as Chinese investment-grade notes carrying the widest risk premiums.
Asian investment-grade credit spreads widened by nearly six basis points on Aug 1, the most in four months, a Bloomberg Index shows, after the weaker-than-expected US jobs data. They have since recouped most of the losses. BLOOMBERG
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