Despite jitters around the sustainability of dollar-denominated Asian high-yield bonds this year, Gordon Ip, senior fund manager, fixed income at Value Partners is confident that the market will continue to be an attractive opportunity for investors looking to mitigate the risk from a potential interest rate shock.

Since December last year the US Federal Reserve has begun the process of normalization, looking to bring interest rates to levels not seen before the global financial crisis.

For Ip, wider credit spreads of Asian high-yield bonds will serve as a buffer when the Federal Reserve decides to raise rates. “In our portfolio, we normally look at positions that have at least 700 basis credit spread versus the treasury,” explains Ip.

Despite the lack of supply of quality dollar-denominated high-yield bonds in the region, Ip isn't worried at all. On the contrary he believes that now is a good time for global investors to take a good look at the space and shed the usual pessimism toward the asset class. Historically most holders of Asian dollar-denominated high-yield credit have been Asian investors.

Currently, performance from Asian high-yield bonds seems to be doing well in a world where strong yield is hard to come by. iShares’s Barclays USD Asia High Yield Bond Index ETF for instance has returned around 11.26% to its investors year-to-date.