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iBoxx SGD Monthly Update: April 2021
March 2021 Performance
In March, a year on from the initial throes of the pandemic, global economies and markets continued to emerge from the shadow of Covid-19. During the month, many across the world had their first vaccine dose administered and, in the US, President Biden signed a huge $1.9 trillion coronavirus stimulus bill.
March then, much like the whole quarter to date, was generally positive for risky assets but not so for bonds. During the month, global equity markets trended up, equity volatility further abated and bond yields continued to rise.
Some continued to link part of the sell-off in bonds to accreting inflation fears, at least in the US, but the debate carries on (especially given recent FED rhetoric and commodity price action). Nevertheless, Asian yields, including those in Singapore, mirrored US and global yields and rose over the course of the month.
Singapore also expanded its vaccination efforts to those over 45 years old in March and while the local equity market reacted favourably to both local and global developments, the SGD bond market endured another losing month.
The overall iBoxx SGD index made a loss of -1.62% over March. Drilling down, we see that the Government sub-index underperformed the Non-Sovereigns sub-index by quite some margin. Indeed, (the top 5) worst performing entities in the overall index this month were all long dated Singapore Government bonds.
There were a few pockets of positive returns across the maturity and quality segments. For example, the high yield segment made a modest gain. However, by and large, most index buckets were in the red.
The iBoxx SGD overall index ended the month offering a yield of 1.95% with a duration of 6.8 years.
April 2021 Rebalance
In addition to a seven-year S$900 million HDB bond, four corporate bonds were inserted this rebalance. The corps were all mid-term Real Estate related issues that added just over S$700 million of new notional into the index.
Also during this latest rebalance, close to S$1.4 billion of corporate notional was removed from the index via bonds that departed as their expected remaining lives fell below one year.
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