Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Financial markets in October finished with a trifecta of
uncertainties around the outcome of the U.S. presidential election,
the size and timing of the U.S. stimulus package, and the
resurgence of COVID-19 cases around the globe.
Against this backdrop, the USD Asia overall index, with over 50%
regional exposure to China, oscillated in a fairly narrow band and
fell -0.07% in the red for the month. Index yield inched up 3 basis
points to 3.38% while credit spread narrowed 11 basis points to 257
basis points. In the same period, the iBoxx $ Treasuries index
dropped 1.03% with its yield rising 14 basis points to 1.07%.
Non-sovereign bonds (+0.08%) outperformed sovereign bonds
(-1.18%) in October. Within credit, high grade bonds (+0.05%) edged
up slightly while high yield bonds (-0.48%) drifted lower. The most
heavy losses were observed in 10yr+ bonds in investment grade and
B-rated bonds in high yield.
Sector outperformance this month largely came from Health Care
(+1.26%) and Consumer Goods (+0.39%). Whereas, Consumer Services
(-0.91%), Basic Materials (-0.35%), Oil & Gas (-0.28%) and
Industrials (-0.15%) all incurred losses.
Within the top 7 markets in the index by market value, only
Singapore (-0.23%) and South Korea (-0.05%) finished lower.
In China USD bonds (+0.08%), high yield outperformed investment
grade, returning 0.20% compared to 0.03%.
China Real Estate delivered a return of 0.20% and currently has
a yield of 7.34%.
China LGFV produced a return of 0.63% during the same period and
currently has a yield of 3.94%.
November 2020 Rebalance
The November rebalance added 61 bonds to the index. Mainland
China and Hong Kong accounted for 42 bonds, making up USD 23
billion (or 70%) of the new notional.
Of the bonds removed from the index, two were redeemed in full
and two were partially repurchased thus becoming ineligible for the
index. No fallen angels were captured this month.
For a detailed breakdown of insertions and deletions, and a list
of fallen angels recognised in 2020, please refer to the Appendix
in the
full commentary.
Post rebalance, the overall index duration increased by 0.06 to
4.44 years.
Singapore had the largest duration increase of 1.24 years,
driven by the inclusion of three very long-dated bonds from Temasek
Financial I Ltd with an aggregated issuance size of USD 2.75
billion.
Mongolia added a new USD 600 million government bond to the
index after the government refinanced the USD 500 million debt due
in 2021.
Posted 06 November 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.
