(April 14): Asian dollar bonds are suffering the biggest losses since the pandemic, following a selloff that underscores concerns about regional borrowers’ credit risks amid an escalating trade war.

Asia’s investment-grade US-currency notes lost 2.4% last week, the most since March 2020, a Bloomberg index shows. Globally, high-grade corporate debt lost 1% in the same period, according to another Bloomberg gauge.

The decline came after risk premiums on Asian investment-grade debt surged last week as worries grew that the export-dependent continent will be among the hardest hit by Donald Trump’s sweeping global tariffs. Despite the setback, the region’s dollar notes have continued to outperform their US and European peers so far this year, thanks to a concentration of shorter maturities, tighter supply and a more benign local inflation outlook.

“The past week was one of the most volatile weeks for Asia credit since the onset of the COVID pandemic in 2020,” Goldman Sachs Group Inc. credit strategists including Kenneth Ho wrote in a note dated April 12. “Unless tariff uncertainties are removed and removed quickly, we see no quick turnaround in spreads.”

Spreads on Asian investment-grade dollar bonds are on track to tighten at least 2 basis points Monday, according to traders. The mild recovery came after the risk premiums widened by 8 basis points last week, reflecting a tentative reprieve following Trump’s decision to pause import duties on a range of consumer electronics.

Asia high-grade dollar bonds have delivered a gain of 0.6% since the year began, while their US counterparts have swung to a loss. Their European peers have produced flat returns.

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