The market environment looked challenging for investors who were only allowed to invest in very highly rated credits, particularly those concentrated on the long end. Very high-grade bonds, such as those issued by HDB and Ascendas REIT, saw steep price falls in 1Q2021 due to an inflation-driven increase in rates before a partial rebound in 2Q2021.
Despite several challenges, it has been a net positive in 1H2021 for the Singapore dollar (SGD) corporate debt market, which has been on the mend since the last quarter of 2020.
At the start of the year, there was a heightened risk of bear-steepening, where the widening of the yield curve was caused by long-term interest rates increasing at a faster rate than short-term rates.
