iShares, the Exchange Traded Funds (ETF) platform from BlackRock, has listed the first ETF in Europe providing access to US$ denominated emerging market corporate bonds.
iShares describes the iShares Morningstar $ Emerging Markets Corporate Bond ETF as providing “broad and diversified exposure to US dollar denominated debt issued by corporates based in Latin America, Eastern Europe, the Middle East, Africa and Asia.” It says it has worked closely with the index provider to construct “a high quality, investible index which incorporates built-in liquidity screens and a cap to ensure no single issuer accounts for more than 5% of the fund.”
Commenting on the launch, Axel Lomholt, Head of Product Development, said: “Emerging market corporate bonds provide an opportunity over the long term to capture the next stage in the growth and development of these countries. This area of fixed income offers investors the potential for attractive total returns as well as a strong income stream, and our new ETF is the first of its kind in Europe to deliver this exposure in a single, cost-efficient trade. As interest in fixed income ETFs continues to grow, we will expand our product range further with high quality funds that deliver transparent and liquid access to areas of the market."
iShares confirms that the amount of dollar-denominated debt issued by emerging market corporates has increased dramatically in the last decade. Corporates issued $188bn of bonds in 2011, more than twice the level of debt issued by emerging market governments in dollars. As issuance has grown, explains iShares, credit quality improved and liquidity increased, all of which has led to the expansion of opportunity for investors.
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