ICE Data Services has seen the level of defaults for bonds double in Q2 2019 to US$7.183 billion, up from US$2.616 billion in Q1 2019. However, the composite Global Fixed Income Markets Index gained more than 2.5% for a second straight quarter and over 5.5% for the half ‒ its second best opening half in 23 years, topped only by 2016 (5.88% H1 return) – although the firm cautiously notes that the index went on to lose almost 2% in H2 2016.
The US Broad Market Index (Investment Grade) gained around 3% for a second straight quarter, producing its best back to back quarters since H2 2012. At 3.15% Q2 2019 was the index’s best performance since Q3 2011. Taken together, the last two quarters earned the index 6.23%. That is the highest consecutive quarterly return since H2 2012 when the index gained 6.45%.
High Yield has enjoyed its longest run of stable to improving rating migrations, with the twelfth straight quarter that the Global High Yield Index upgrade/downgrade ratio has been at or above the 0.90 mark ‒ the longest such stretch going back to the start of the data series in 1999.
The Emerging Markets composite index scored its second best half on record, with back to back quarterly gains of about 4% each and 8.22% for the first half. Results were very strong across all components of the composite EM index.
The external and local sovereign indices clearly performed better than non-sovereign counterparts, with the sovereign indices both up around 4.5% on the quarter as compared to roughly 3% in gains for the non-sovereign indices.
©TheDESK 2019
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