According to the Zhitong Finance APP, Invesco's investment article states that the Asian high yield bond market offers attractive valuations compared to the USA high yield bond market, with a chance for yield increases. From a sector perspective, the bank believes that diversifying investments into Macau casinos, wind power, subordinated financial bonds, infrastructure, and consumer companies could capture the opportunities of multi-sector holdings in rapidly growing Asian economies. The bank continues to be bullish on BB-rated issuers, as their stable credit and cash flows may turn them into potential stars in the future.

Invesco points out that Asian high yield bonds are a short-term asset class, with an average maturity of only 2.4 years (as of November 8th), and a lower interest rate sensitivity than Asian investment grade bonds. In recent years, BB-rated bonds have consistently had the largest share in the index, accounting for approximately 45%. The bank believes that by investing in the flexibility of BB and BBB-rated bonds, they can gain credit spreads and broader opportunities.

In Invesco's outlook for the fourth quarter of the Asian high yield bond market, it believes that, compared to global high yield bonds, the attractive valuation opportunities for Asian high yield bonds mainly lie in the B-rated sector. The bank is paying attention to Mongolian bonds, commodity bonds, and double-digit interest bonds because they have good credit and offer investment opportunities for income and capital appreciation. In recent years, there has been an increase in asset-backed securities and convertible bonds issued by Asian high yield bond issuers. The bank sees this as a bullish development because it provides investors with opportunities to create higher excess returns by selecting the highest risk-return parts of the capital structure.

For example, the bank found an opportunity to upgrade the portfolio ratings, converting regular high yield corporate bonds into investment grade asset-backed securities from the same issuer, with the income from the latter being used for social purposes. Additionally, due to the significant spread recovery in this asset class, the bank also prefers to convert investments into convertible bonds, as the downside risk is limited to the bond floor price. Among bond issuers with high free cash flow to equity ratio, deleveraging will increase equity value and enhance the value of embedded equity warrants. This also helps hedge against actions more favorable to shareholders, as convertible bondholders' interests align with shareholders' interests with the bond floor price as protection.