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Transition credit review: Asia YTD 2026

Written by Jeannette Leong

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This report forms part of AFII's Transition Credit Review series and provides a year-to-date assessment of Asia's transition credit markets, covering the region's multi-currency GSS market development and USD bond market performance across Emerging Asia, Australia and Japan. Asian USD credit spreads have tightened year-to-date despite a sharp widening episode linked with geopolitical volatility and oil-supply concerns, with the subsequent recovery masking substantial differences across sovereigns, sectors and issuers.

Three transition-related themes stood out. Sovereign markets diverged during the oil shock, while energy-import vulnerability reinforced the case for domestic renewable-energy and grid investment. Supportive commodity conditions allowed fossil-linked issuers to retain market access despite longer-term transition exposure. AI strengthened technology-sector performance while increasing forward-looking power demand.

Primary markets stayed open throughout, with Asia USD issuance reaching USD245 billion at end-July and GSS bonds accounting for 9% of total supply.

Sovereign spreads widened sharply across the Philippines, Thailand and India during the oil shock, while Indonesia's underperformance reflected governance concerns. Both still returned to well-oversubscribed deals in June.

Commodity strength supported near-term credit for fossil-linked issuers like Whitehaven Coal and San Miguel Global Power, even as structural transition risks remain unchanged beneath the surface.

AI-linked demand supported semiconductor, memory chip and digital-infrastructure credits across Emerging Asia and Japan, even as AI-linked equities saw sharp volatility in July. NAVER, Tencent and NTT all returned to market on AI and data-centre strategies, while Korean utilities, Tohoku Electric and PLN issued to fund related power infrastructure.

About the author

Jeannette Leong

Jeannette Leong

Research Associate, APAC

Based in Singapore, Jeannette focuses on credit research and analysis across the Asia-Pacific region. She brings 19 years of fixed income investing experience in emerging markets, Asian fixed income and China’s onshore bond market.

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