Hedge Fund Triada Says Now Is Best Time to Buy Asian Credit
For Triada Capital Ltd., a Hong Kong-based hedge fund focusing on pan-Asian corporate credit, 2019 offers abundant buying opportunities following the region’s worst bond sell-off in a decade this year.
“There’s a wealth of opportunities for good trades next year,” said Monica Hsiao, the former CQS Management Ltd. portfolio manager who started the Triada Asia Credit Opportunities Fund in 2015. Her team is currently refreshing work on credits with the view to increase high-yield bond exposure in their portfolio, she said.
Hsiao, who has a decade of experience with Asian fixed income, says Asia is entering a relatively benign credit environment as the U.S. Federal Reserve could slow its pace of rate hikes next year and China is likely to continue with policy easing. There are no signs of runaway inflation yet and U.S.-China trade discussions could make progress, hence it’s the best time to get into Asian corporate bonds as “a lot of the individual credits are priced at such cheap valuations,” said Hsiao.
This is how they perceive Asian Bond Markets:
- We believe Asian high-yield dollar bonds are much more attractive right now than high-grade. Investment-grade bond valuation is not as cheap compared with the U.S. high-grade after the latter has repriced wider recently.
- Within dollar junk bonds, China property sector in general is very cheap as there were twice as many positive ratings actions compared to negative actions, even as bonds were selling off dramatically this year, and we also see opportunities across selective Chinese industrials names and some Indonesia corporates.
The fund is up 3.4% this year as of Dec. 12 on net return basis, compared with a 1.6 percent loss for the overall Asian dollar bonds over the period. To avoid “landmines and finding the winners in this aftermath of a broad shake-up,” fundamentals will be a key focus in 2019, she said.
Reference
Bloomberg, Annie Lee, 2018-12-14, “Hedge Fund Triada Says Now Is Best Time to Buy Asian Credit”
