For several years, investors struggled to find income without taking on risk that was often beyond their comfort zone. But as the US Federal Reserve and other central banks raised interest rates in response to rampant inflation, bond yields rose across the curve and income-starved investors were presented with opportunities.

Of course, near double-digit inflation rates across the world mean compelling nominal yields are less appealing in real terms. Nevertheless, if the actions of central banks to curb price rises prove effective and inflation subsides, then locking in high income now might turn out to be a shrewd decision.

On the other hand, if tight monetary policies inadvertently provoke a recession, then fixed income investors would face another threat: deteriorating earnings for corporate borrowers. Mindful of this danger, most investors and fund selectors in Asia seem to be confining their bond exposure to only the best quality investment grade credits.

For instance, China property high yield bonds, which comprise most of the Asia fixed income universe, have few fans, although increasingly the market is differentiating between borrowers that are viable and those that will struggle. Arguably, emerging market bonds from other jurisdictions offer better value.

Meanwhile, the wipeout of Credit Suisse’s AT1 bonds following the bank’s takeover by UBS has sparked concerns about the desirability of low-ranking capital bonds issued by all but the best banks.

Another prominent theme, as always, is ESG. Fixed income funds managed according to ESG or sustainability criteria are certainly gaining traction in Asia, as elsewhere in the world, but the availability of reliable, accurate data is still a problem.

All these topics and more are examined in this special Citywire fixed income issue. We hope you enjoy it.