Corporate Bond Market Returns

Index data provided by Markit Group Ltd

i) Returns to March, 2019

Bond market returns updated monthly

Fixed and equity markets were vying for the best relative performer through the quarter. They’ve both had a quite brilliant one, all being told. The FTSE – at the mercy of the Brexit debate and effectively three meaningful votes (all failed) – managed to rise by 8.3% anyway.

A slowing Germany with manufacturing there and across the Eurozone essentially in recession – or will be confirmed to be that way soon enough, saw the Dax still manage to gain 9%, with the €Stoxx50 up 12.7% in the first quarter. That’s all excellent, but in the US, the S&P put on 13.1% and the Dow 11.1%.

In credit, it has been a superb quarter. Spreads are tighter across the board and total returns at very high levels, of course all boosted by the rally in the underlying government bond market. IG credit has returned 3.25% split equally between financials and non-financials in Q1. In March, the IG index returned 0.5% (versus +0.7% in February). IG spreads (iBoxx) tightened by just 5bp in March but still by a huge 32bp in the first quarter.

The high yield market, supposedly under pressure as the macroeconomic outlook worsens, has returned a stunning 5.1%, helped by lower yields everywhere else and lower financing costs to come for borrowers when they finally (if they finally) decide to pull the trigger on deals. The high yield iBoxx cash index was 9bp tighter in the month and 84bp tighter in the first quarter.

Even sterling corporate markets are feeling no pressure from the Brexit situation, the rally in Gilts and spreads seeing returns top out at 4.8% for the first quarter. Top of the pile though is the AT1 market, with spreads 110bp tighter in the opening quarter (+28bp in March though) and returns for the first three months of the year at 5.2%.


ii) IG & HY Corporate Bond Total Returns (Annual)

iii) Investment Grade Corporate Bond Total Returns (Annual)

iv) High Yield Corporate Bond Total Returns (Annual)