August 2022 Performance
The latest Consumer Price Developments report showed inflation continued to pick up in Singapore. The Monetary Authority of Singapore (MAS) Core Consumer Price Index (CPI) rose to 4.8% on a year-over-year basis in July, mainly driven by the rise in prices of food and energy, while the CPI-All Items inflation moved up 0.3 percentage points to 7.0% year-over-year for the same period.
With upward price pressure from imported goods and strong consumer spending, the central bank projects that inflation will persist and stay elevated for the next few months.
In other news, Singapore joined a growing list of countries to fund the battle against climate change. In early August, the MAS issued its first sovereign green bond, known as Green Singapore Government Securities (Infrastructure). Proceeds from the issuance will be used to finance eligible projects from the Singapore Green Plan 2030, including two new future mass rapid transit lines. The bond, which has an issuance size of SGD 2.4 billion and a tenor of 50 years, was priced at a yield of 3.04%.
After a strong performance (up 1.45%) in July, the iBoxx SGD Overall Index resumed its downward trend, falling 1.16% in August. The index yield dropped 23 bps and finished the month at 3.28%.
The sovereign and non-sovereign subindices both recorded losses in August. With a weight of around 35% by market value in the overall index, non-sovereign bonds outperformed sovereign bonds by 111 bps.
The investment grade (IG) subindex had negative performance this month. In general, rating segments A and above saw large losses in the medium- to long-dated maturity buckets. In contrast, rating segment BBB recorded the largest gain in the 10+ year maturity bucket. The high yield subindex outperformed the IG subindex by 213 bps but has only about 5% weight in the overall index.
The top five performers were all subordinated corporate bonds from the financial sector. The worst five performers included senior, short- to medium-dated corporate bonds, as well as ultra-long-dated sub-sovereign bonds from the Land Transport Authority of Singapore. No bonds in the index dropped more than 5% this month.