Solactive and UBS launch development bank bond indices

Apr 26th, 2018 | By | Category: Fixed Income

Solactive and UBS have launched the Solactive UBS Development Bank Bond Indices, a family of 36 total return indices tracking the performance of high-grade debt issued by the World Bank and other development banks.

Steffen Scheuble, CEO of Solactive

Steffen Scheuble, CEO of Solactive.

Development banks are supranational institutions that gather funds for development projects with positive societal impact.

The purposes of these projects can vary greatly; however, the majority are covered in the United Nations 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals.

By focusing on development banks, the partnership seeks to develop an area of fixed income ESG (environmental, social, and governance) strategies that has yet to be widely explored.

The indices consist of US dollar-denominated bonds issued by development banks that have satisfied the methodology criteria. The family has been subdivided into three groups: bonds issued by development banks; bonds issued by multilateral development banks; and bonds issued by the World Bank.

For each of these three groups a broad maturity index is available as well as two targeted maturity versions which track the performance of bonds with one to five years, or five to ten years, until expiry. Each index is weighted by market capitalization, reconstituted and rebalanced monthly, and available in four different currencies (Swiss francs, euros, pounds sterling, and US dollars).

The introduction of the indices opens the door for the creation of investment products, including ETFs, based on the new offerings. Such ETFs will provide investors with the means to support an economic development agenda by investing in large baskets of fixed income instruments issued by high-grade financial institutions.

Steffen Scheuble, CEO of Solactive, commented, “Indices play a critical role in attracting capital to sustainable development. They enable investors to gain efficient, standardized access to relevant instruments and can help deepen liquidity and issuance. Partnering with large institutions such as UBS helps us develop these offerings and bring them to a wider audience.”

Axel Weber, chairman of UBS Group, added, “UBS has committed to channelling more capital towards meeting sustainable development targets. Indices for World Bank and other highly rated development bank debt enable investors to allocate more to sustainable high-grade debt overall. They also help development banks fund their activities.”

Solactive has announced it is further developing price return and hedged versions of the indices.

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