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(Bloomberg) — Asian corporate bond markets rebounded alongside other regional assets, lifted by signs of easing tensions and President Donald Trump’s comments on talks with Iran.
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Credit default swaps in the region — the cost of insuring Asian investment grade debt against defaults — fell by at least 4 basis points Tuesday, according to traders. The premium on Asia investment grade bonds over comparable US Treasuries also narrowed by 1 to 4 basis points, they said.
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The recovery follows Monday’s broad selloff, when Asia corporate bond spreads widened more than six basis points, the steepest move since April 2025, after Trump threatened strikes on Iranian energy infrastructure. Tuesday’s price swing underscores the speed of headline changes and the volatility of sentiment in tracking them.
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“The market rebound could be transitory if the US government reverses courses on military deployment, and we believe geopolitical uncertainties remain elevated,” said Jeff Zhang, an analyst at Morningstar Inc.
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After issuing his earlier threats, Trump said the US would postpone strikes following what he described as “productive conversations” with Iran. The move eased immediate concerns over oil-supply disruptions and a wider conflict.
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Meanwhile, Asian stocks pared early gains Tuesday after an Iranian lawmaker’s comment on ruling out negotiations with Trump, underscoring the fragility of optimism around potential de-escalation. Trump also has ordered Marines to head to the region, including the 31st Marine Expeditionary Unit from Japan with more than 2,000 troops.
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“In the short term, we expect Asia credit spreads to stay volatile and to diverge,” said Lei Zhu, head of Asian fixed income at Fidelity International.
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For now, the rebound in corporate bonds has reopened a window for issuers to tap the region’s dollar primary market. Korea National Oil Corp. is marketing benchmark-sized notes across three tranches, the first investment-grade deal in about a week. Nippon Life Insurance Co. has mandated banks for a potential US-currency offering.
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“We are advising clients to be ready to move as issuance windows reopen — as seen overnight,” said Rishi Jalan, Citigroup’s head of APAC DCM syndicate. “Investors remain willing to put money to work in high-quality names.”
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(Updates with details and analysts comments throughout.)
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