KKR said the global bond-market sell-off presents an opportunity for
fixed-income investors to lock yields comparable to Asian high-yield while
avoiding the credit risks of junk bonds. Dengzhao Pan, head of Asia liquid
credit at KKR, said: "We view this as an opportunity to upgrade portfolio
quality rather than to sit on the sidelines. Improving credit quality can
provide a larger margin of safety and reduce expected credit losses." KKR
reported $796 bln AUM at end-June. The firm said Middle East conflict-driven
oil-price moves and ensuing central-bank tightening have pushed investment-grade
corporate yields, including Asian credits, to their highest in over two years,
bringing some high-quality bonds' yields close to typical junk levels. Asian
investment-grade USD bonds yield 5.8% on average, with longer-dated and
subordinated issues yielding more.
