Despite a strong 2019 for Asian credit, Nomura said it has retained its preference for the asset class next year as interest rates will remain low and because valuations are reasonable and bond supply in G3 currencies will decline. The Japanese investment bank favors high yield over investment-grade bonds and leans towards China property and Chinese state-owned enterprises on a sectoral basis.

It forecast that dollar bonds from Asia ex-Japan issuers will decline to $270 billion next year after 2019’s expected annual total of $300 billion. At the current aggregate of $294 billion, issuance has already overtaken the previous record of $288 billion struck in 2017.

The current year’s tally was a huge rise over 2018’s total of $230 billion. Prominent among its underweight positions are Chinese industrials, Chinese privately-owned enterprises and Indian companies both high yield and investment grade.