Monthly performance, maturity, yield and duration of the iBoxx ALBI, iBoxx ABF and iBoxx SGD Indices.
Since the start of the year, the option-adjusted spreads (OAS) for investment grade U.S. corporate bonds—as represented by the iBoxx $ Corporates—were range-bound between 104 to 120 bps. The last time bonds were trading in this range was toward the tail-end of 2021. As a result, corporate issuers may be looking take advantage of the current lower borrowing cost environment. However, from the perspective of the lender, they would be compensated less for the additional risk they undertake (over risk-free instruments) compared to the past two years.
As the next U.S. FOMC meeting is drawing near in March, the S&P 500® was buoyant, up 5.17% in February and closing at an all-time high, led by gains in technology and AI. Chinese stocks—as represented by the S&P China 500 (USD)—also bounced back from losses in January and posted 9.08% in February. At the same time, the broader S&P Pan Asia Ex-Japan LargeMidCap (USD) gained 4.22%.
While the equity markets cheered, results were mixed in global bond markets. U.S. Treasuries—as represented by iBoxx $ Treasuries—continued accumulating losses in 2024 and declined 1.38% in February. Asian local currency markets, however, provided some bright spots—to be discussed in the following sections.
iBoxx Asian Local Bond Index (ALBI)
In Asian fixed income, Asian local currency bonds—as represented by the iBoxx Asian Local Bond Index (ALBI) (USD Unhedged)—gained a marginal 0.06% in February with mixed performance in the local markets (and local currencies against the U.S. dollar).
India and Thailand, in local currency terms, were the top-performing local markets as they continued their momentum into February, posting 1.20% and 1.07%, respectively. Both China On-and Offshore markets also recorded modest gains. At the bottom of the pack were Singapore and South Korea, down 0.93% and 0.66%, respectively.
For most local markets, gains or losses tended to extend across the whole term structure. China Onshore 10+ and India 10+ stood out this month, posting 2.75% and 1.87%, respectively. On the flipside, Hong Kong 10+ (down 2.20%) and Singapore 10+ (down 2.15%) were the worst-performing segments.
As of the end of February, the overall index yield increased marginally by 2 bps to 3.90%. India remained the highest-yielding bond market in the index, posting 7.13%, while China Onshore (2.41%) represented the lowest-yielding market.