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iBoxx USD Asia ex-Japan Monthly Update: June 2020

08 June 2020 Rahul Sharma

May 2020 End-of-Month Commentary

Markets continued to rally in May as talks around the gradual reopening of domestic and global economies began to surface.

The iBoxx USD Asia ex-Japan index closed the month up 2.20% (and down just 2.93% from the 6 March high). Credit spreads continued to contract, yields slowly retraced back toward their pre-crisis levels and market sentiment in general swung back to some "risk-on" again.

Sovereign bonds (+3.07%) outperformed corporate bonds (+2.13%) in May. Within credit, high yield bonds (+3.10%) outperformed high grade bonds (+1.91%). Except for two TEMASE bonds in the AAA / 10+ segment, gains were observed across all rating and maturity buckets.

All corporate sectors advanced this month. Health Care (+3.96%) and Basic Materials (+3.96%) recorded the best performances, while Technology (+1.10%) gained the least.

All top 7 markets in the index by market value performed well this month, with India (+6.30%) and Indonesia (+5.59%) registering larger gains than the broader market (+2.20%).

For China $ bonds, high yield bonds outperformed investment grade bonds, returning 2.01% compared to 1.08%.

Within China $ corporates, Financials rose 1.52%, outperforming Non-financials by 21bps. China Real Estate returns 2.02% this month and currently has a yield of 7.83%.

June 2020 Rebalance

The latest rebalance added 24 bonds to the June membership. China Onshore, Hong Kong and Indonesia together contributed 19 bonds, making up $11.6 billion (or 75%) of the new notional added to the index.

Of the 29 bonds removed from the index, 20 of them matured in May. For a detailed breakdown of insertions and deletions, please refer to the full commentary.

The index duration increased by 0.05 to 4.33 years after the rebalance.

The Philippines saw its duration rise by 0.36 to 7.01 years, largely due to the inclusion of two long-dated BBB bonds with a combined notional of USD 2.35 billion.

See full report here

Posted 08 June 2020 by Rahul Sharma, Director - Indices, IHS Markit

IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.


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