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iBoxx USD Asia ex-Japan Monthly Update: April 2022

07 April 2022 Wilson Mak

March 2022 End-of-Month Commentary

The US Federal Reserve (the Fed) lifted its key rate in March for the first time since late 2018. The quarter percentage point increase initiates a series of anticipated rate hikes the Fed deems necessary to tame inflation (the highest seen in 40 years). As US rates rose, market sentiment vacillated between untamed inflation risk and worries over an aggressive Fed tightening cycle. Meanwhile, the normally upward sloping US Treasuries yield curve flattened significantly this year, reflecting tighter monetary policy at the short-end and perhaps weaker economic growth expectations over longer horizons.

Rising interest rates were a primary instigator of volatility for Asian USD bonds this month. The iBoxx USD Asia ex-Japan index dropped -1.87%, with its average yield advancing 0.46 percentage points (ppts) and its average credit spread narrowing by 8 basis points (bps). The index has returned -5.88% year-to-date.

The Asia USD IG and HY sub-indices fell for the third consecutive month. The Asia USD IG index ( 1.85%) retreated across the curve where large losses were seen in long maturity buckets. The Asia USD HY index (-1.99%) saw huge losses from the B-rated segment.

The seven largest markets in the index made negative returns as their yields climbed higher in March.

China USD bonds (-2.20%) underperformed the broader index this month. Even with supportive measures by the government, idiosyncratic headlines on Chinese property issuers continued to negatively impact the real estate sector.

The latest issuers that were removed from the index this month for missed coupon payments were DaFa Properties Group and Yuzhou Properties.
The China USD LGFV index (-0.74%) outperformed other sub-indices in the China USD index family. It currently offers a yield of 4.43%.

April 2022 Rebalance

This rebalance, the iBoxx USD Asia ex-Japan index added 33 eligible bonds, bringing in close to USD 17.8 billion of new notional. The investment grade (IG) sub-index saw USD 16.6 billion of notional raised from 30 new issues, while the high yield (HY) sub-index saw about USD 1.2 billion worth of notional from 3 issues. Of the 45 bonds removed from the index this month:

  • 11 were traded flat of accrued interest - issued by 2 China real estate developers.
  • 5 were either exchanged, redeemed, or repurchased, and became ineligible for the index.

Four rising stars were identified this month, all based on iBoxx implied credit rating methodology.

Please refer to the Appendix in the full report for a breakdown of this month's insertions and deletions, and a list of fallen angels and rising stars recognized in 2022.

Post-rebalance, the overall index duration was up slightly to 4.45 years. Markets with the most noticeable change in duration were the Philippines (+0.14 years) and Thailand (+0.18 years).

The Philippines issued 3 new bonds for a combined notional amount of USD 2.25 billion, with respective maturities of 5, 10 and 20 years.

In the Thailand market, GC Treasury Centre Company Limited (a subsidiary of PTT Global Chemical Public Company Limited (PTTGC)) added two long-dated bonds to the index with an aggregated size of USD 1.3 billion.


Posted 07 April 2022 by Wilson Mak, Analyst - 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.

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.


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