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Perhaps heralding a turning point in the pandemic, November
welcomed a number of tantalizing vaccine efficacy announcements.
Notwithstanding that many countries are still struggling to contain
the virus, positive sentiment imbued investors during the month.
This coupled with the elimination of US election uncertainty helped
drive risky assets over the period.
Global equity markets soared (across both developed and emerging
markets) and implied equity volatility fell. In global fixed
income, credit performed well with IG, HY and EM outperforming
government bonds in general. In CDS space we also saw benchmark
CDX/iTraxx credit spreads narrowing to almost pre-pandemic
levels.
A similar story played out in the SGD bond market over the month
with riskier segments doing well. The iBoxx SGD Non-Sovereigns
index posted gains (0.49%) whilst the iBoxx Singapore Government
index registered a loss (-0.41%). Across the credit spectrum the
lower quality segments outperformed, with the BBB bucket faring
best. The HY bucket also posted decent gains. In the AAA bucket,
losses were concentrated in the longer end of the curve.
Over November, the iBoxx SGD Overall index made a slight loss
(-0.09%) and closed the month offering a yield of 1.29% and a
duration of 7.18 years.
December 2020 Rebalance
Three new bonds entered the index at the December rebalance,
inserting just over S$ 3.5 billion of new notional.
Two bonds with less than 1 year of expected remaining life were
removed from the index. The largest removal was a S$ 900 million
Housing and Development Board bond.
Please refer to the table for rating changes observed at the
December rebalance in the full commentary.
Posted 07 December 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.
