Singapore Exchange (SGX) and Thomson Reuters have teamed up to launch a suite of fixed income indices tracking the performance of Singapore dollar (SGD)-denominated government and corporate bonds.
The Thomson Reuters/SGX Singapore Fixed Income Index series is ideal for the creation of index-based investment products such as exchange-traded funds (ETFs).
The Thomson Reuters/SGX Singapore Fixed Income Index series is the first complete government, statutory board and corporate bond index series to provide five years of historical data, offering market participants a barometer of fixed income returns across a multitude of segments.
The indices are based on bonds priced objectively and independently by the Thomson Reuters Evaluated Pricing Service, a time-specific assessment of the fair market value of each bond.
According to the two partners, this pricing method provides better indicative prices as compared to composite or contributed prices that may be out of date, which also makes these indices ideal for the creation of index-based investment products such as exchange-traded funds (ETFs) – a key target market for the indices – which seek to provide specific investment access to Singapore debt.
The index family covers over 80% of the SGD denominated plain vanilla bullet bond market. The flagship TR/SGX Singapore Fixed Income Composite Index is divided into various sub-indices along issuer, credit rating and maturity buckets.
Muthukrishnan Ramaswami, president of SGX, said: “Asian companies are listing a record amount of bonds on Singapore Exchange and we are the listing venue of choice for any fixed income deals that take place in Asia. With the launch of the bond indices we aim to increase transparency and improve the price discovery process for investors. This is another key milestone for both retail and institutional investors seeking diversified multi-asset exposure through the Singapore market.”
The Singapore bond market has grown exponentially in the last 10 years, with primary issuance of corporate bonds hitting a record volume of S$26 billion in 2012. The depth of growth has been accompanied by the broadening of the market, with foreign issuers, high-yield issuers and new debt instruments adding to the diversity of the market, bolstering the Singapore government’s goal of being a regional bond centre.
Sanjeev Chatrath, managing director and regional head for Asia, financial & risk, at Thomson Reuters, added: “With continued interest in the Singapore fixed income market and growing demand for local index products for benchmarking, we are delighted to strengthen our relationship with SGX. Across the global markets in which Thomson Reuters operates, we continue to work closely with market participants to offer representative benchmarks that serve to connect and empower the financial community. The launch of this index series in Singapore is just another step in demonstrating our commitment to developing financial markets in the Asia-Pacific region.”
The new indices will likely compete against the Markit iBoxx SGD Index family, which was unveiled by Markit in June 2013, becoming the first to include comprehensive and detailed coverage of the SGD corporate bond market. Like the SGX/Thomson Reuters suite, this family of indices is designed to track the performance of sovereign and corporate debt denominated in Singapore dollars.