iBoxx SGD Monthly Update: December 2020
November 2020 End-of-Month Commentary
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.
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