iBoxx SGD Monthly Update: September 2022

To view the full month-end commentary and rebalancing overview for iBoxx SGD, please click here.

August 2022 End-of-Month Commentary

The latest Consumer Price Developments report1 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%.2

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.

September 2022 Rebalance

This rebalance, close to SGD 6.20 billion of new notional was inserted into the iBoxx SGD Overall Index via four bonds.

Concurrently, three bonds left the index, removing about SGD 1.90 billion of notional. All departing bonds left the index due to their expected remaining lives falling below one year.

Additionally, there were four bond rating changes in the index this month, all based on the iBoxx implied credit rating methodology.

Please refer to the Appendix in the full commentary for rating changes observed at the July rebalance.

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