Solactive covers major Nordics Bond Market by releasing new Index Series tracking Investment Grade Corporate Bonds and Non-us-Municipalities issued in SEK …
Timo Pfeiffer, Chief Markets Officer at Solactive
With the release of the Solactive SEK IG Credit Index family®, the German index provider reacts to a surge in demand for investment-grade corporate bonds and non-US-municipalities issued in SEK.
The new index series is fully rules-based and includes more than 800 holdings with corporate and municipal issuers, making Solactive one of the few providers offering its clients access to this specific market. In addition to utilizing traditional credit rating agencies, Solactive trusts the expertise of the Nordic Credit Rating (NCR), to cover a wider range of bonds for sub-indices of the index family.
Through collaboration with NCR, Solactive benefits from the local credit rating agency’s expertise and is able to further expand its footprint in the Nordics region.
The Solactive SEK IG Credit Index family® allows investors access to investment grade (BBB- or equivalent) bonds without maximum maturity constraint, which allows a clearer representation of the market compared to other indices.
Additionally, The Solactive SEK IG Credit Index family® applies filter mechanisms that guarantee a substantial liquidity of the index: At first, only fixed, zero-coupon, and floating rate notes issued in SEK sold by corporate or municipal entities are eligible for index inclusion.
Moreover, potential index constituents are required to have at least SEK 50 million per bond and SEK 500 million per issuer outstanding. Furthermore, the index excludes Step-up, covered, inflation-linked, callable, puttable, subordinated, securitized or collateralized, or perpetual bonds as well as equity-linked and preferred securities.
Besides relying solely on traditional credit rating agencies, Solactive benefits from the know-how of independent ESMA credit agency Nordic Credit Rating (NCR), which allows Solactive to potentially incorporate approximately 60 additional bonds to sub-indices of the index family.
With NCR’s steadily growing issuer coverage, Solactive will have the opportunity to include more domestic bonds in the Solactive SEK IG Credit Index family® in the future. Through this collaboration, Solactive is able to customize indices for its clients to a more granular level.
The indices can serve as the direct underlying for major index funds, covering IG corporate bonds and non-US-municipalities issued in SEK or as benchmarks of financial products.
Timo Pfeiffer, Chief Markets Officer of Solactive comments: “The Solactive SEK IG Credit Index family®, enables us to serve our clients with a broad and profound access to a vital part of the Nordics bond market. This new index family allows for a great degree of coverage, as it benefits from a deeper analysis of the domestic bond market conducted by Nordic Credit Rating (NCR). We are very pleased to expand our index offering in that segment with particular relevance for product providers and real money investors in the region.”