Credit spreads surged to 129 basis points, the highest level since May 2025, as investors dumped AI names and chased safe‑haven assets.
The Bloomberg Global Corporate Bond Index marked the jump, with corporate yield premiums climbing to 129 bps, up 1.5 bps on the day. Asian credit‑default swaps followed suit, widening 1.5 bps to 78 bps, while China technology spreads widened 3–5 bps and India investment‑grade spreads edged up 3 bps.
Natixis senior economist Gary Ng warned that "credit risk is now calling the shots" and that risk‑averse sentiment toward AI is keeping rates elevated. Lakshmanan R, head of South and Southeast Asia corporates at CreditSights, added that this repricing reflects a confluence of global shocks and that higher cash allocations and money‑market instruments are now preferred.
The market’s pivot to U.S. Treasuries and Japanese bonds, which rallied across all tenors, underscores a broader flight‑to‑quality. Banks and financial‑sector senior debt remain attractive, with the sector’s higher credit quality offering a relative buffer against the widening spread.
Looking ahead, analysts expect the spread tightening to persist as geopolitical tensions and AI‑funding concerns loom. Investors are likely to keep a close eye on forthcoming corporate earnings and any policy shifts that could influence risk appetite.