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iBoxx SGD Monthly Update: June 2020

08 June 2020 Rahul Sharma

May 2020 End-of-Month Commentary

Global stock markets continued to climb in May as some countries began to relax their Coronavirus lockdowns. The fall in equity volatility and corporate credit spreads, along with the stabilisation of commodities markets, started pointing towards the return of some "risk on" sentiment.

However, the Singapore economy and its stock market were still very much curtailed by the nationwide circuit breaker over May. On May 26, just a week before phase 1 reopening of the city state, the government announced its fourth fiscal stimulus package (the Fortitude Budget), clearly acknowledging the ongoing precarious situation.

SIBOR rates fell over the month, reflecting the Monetary Authority of Singapore's accommodative stance that has allowed the S$NEER to depreciate since March. SGD bond yields also fell over May, helping generate a 1.04% gain for the iBoxx SGD overall index. Gains in the index were recorded across the board, in all rating and maturity buckets.

The non-sovereign sector out-performed the government sector. The best performing bonds came from the high yield sector and the worst performing bonds were concentrated in real estate.

The overall index closed the month offering a yield of 1.35% and a duration of 6.77 years.

June 2020 Rebalance

The June rebalance removed just under SGD 2 billion of notional from the index via four financials while adding SGD 300 million of new notional via two real estate bonds.

Please see the table in the full commentary for rating changes observed in June 2020.

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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