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The British pound sterling-denominated iBoxx indices extended
losses in May but at a slower pace than in previous months. Yields
on iBoxx GBP Indices rose across the board, with the duration
slipping lower. Over the course of the month, the short maturities
halted losses, with some sectors flipping into positive
territory.
However, the longer maturities and government-issued bonds
remained under pressure. The iBoxx GBP Gilts Index, reflecting
government bonds, returned -3.28% last month, with the biggest
monthly declines concentrated in the long-dated maturities, amid
fears of stagflation in the economy.
Earlier in May, the Bank of England's governor, Andrew Bailey,
said the U.K.'s central bank had limited tools at its disposal to
limit further inflation hikes, which rose to new highs in the April
reading released mid-May.
In the corporate space, Utilities, which tends to include more
leveraged companies, saw the lowest monthly returns, at -2.39%.
Consumer Services was not far behind, with worries of economic
slowdown looming.
May 2022 Month-End Rebalance
The month-end rebalance in May resulted in a small number of
insertions and deletions in the iBoxx GBP Overall Index, with only
about GBP 4.06 billion of insertions and GBP 1.20 billion of
deletions. Four bonds saw a rating upgrade: two issued by AXA SA
and two by Volkswagen International Finance NV. The sub-sovereigns
category saw the highest number of insertions, with few overall new
additions in the Financials, Real Estate and Collateralized
categories. All insertions were for issuance below the GBP 1
billion mark.
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.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
