The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 15 basis points to 142 basis points as of 4:08 p.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge, which increased 9 basis points last month, is set for its highest close since Sept. 26 and its biggest one-day gain since Sept. 20, according to data provider CMA.

The Bank of Japan today refrained from extending the length of loans it uses to smooth bond market volatility, according to a policy statement in Tokyo. Twenty of 23 analysts in a Bloomberg News survey forecast the BOJ would approve loans of two years or longer, or said that such a move was possible.

“The Bank of Japan is finally joining the hyperactive monetary policy experiment,” Masanao said. “Initial responses in asset markets have been quite positive and the near-term growth outlook has become hopeful. However the sustainability of these gains will depend on the implementation of structural policy reforms.”

Limits Reached

Bharti Airtel Ltd., the second-largest issuer of junk notes in the U.S. currency in Asia this year, missed analyst estimates last quarter as net income plunged 49 percent after a weaker rupee raised interest payments and prices for network equipment.

Companies from China and Hong Kong have dominated sales, accounting for 59 percent of the region’s dollar-denominated junk bonds since Dec. 31, data compiled by Bloomberg show.

The amount of high-yield debt in the region outstanding and rated by Moody’s totals about $58 billion versus about $40 billion as at the end of December, the ratings company said in the fifth edition of its Asian High-Yield Compendium, released today. Moody’s rates 126 junk borrowers in 28 industry groupings across 14 countries in Asia, including Australia.

Net exports and investment that previously fueled China’s growth are reaching their limits, according to Pimco’s report.

“Prospects for export-led growth are inhibited by China’s large size in a global marketplace that remains deficient in aggregate demand due to high indebtedness in the developed world,” Ramin Toloui, Pimco’s global co-head of emerging- markets portfolio management, said in the report. “Investment cannot play its previous role in driving growth because it’s already risen to almost 50 percent of gross domestic product, up from 35 percent in 2000.”

‘New Normal’