NEW YORK--(BUSINESS WIRE)--BofA Merrill Lynch Global Research (NYSE: BAC) today announced the launch of new Emerging Markets Corporate Bond Indices designed to track the performance of emerging markets corporate and quasi-government debt denominated in U.S. dollar and euro. The series includes two flagship indices:
- The BofA Merrill Lynch Emerging Markets Corporate Plus Index (ticker EMCB) is a broad, capitalization-weighted composite index designed to track the performance of U.S. dollar- and euro-denominated debt of corporate issuers who primarily do business in emerging market countries.
- The BofA Merrill Lynch U.S. Emerging Markets Liquid Corporate Plus Index (ticker EMCL) is a subset of the Emerging Markets Corporate Plus Index containing only U.S. dollar-denominated bonds that meet higher minimum size requirements than those required for inclusion in the broad index. It also limits exposure to individual countries and issuers.
These indices are unique as they include segments of the market not previously tracked in a single index, including: quasi-government debt; EUR denominated bonds (in the EMCB); and bonds that meet less restrictive maturity and size requirements (in EMCB). As a result, the EMCB currently tracks 47 countries, and the EMCL 37 countries, providing the most extensive coverage of this rapidly growing market, 72 percent of which is rated investment grade.
In addition, an extensive suite of 30 sub-indices, covering currency rates, region and sector, are available and offer investors a more granular view of the market than was previously available. This flexibility allows customized analysis to meet specific portfolio strategy needs.
“Emerging Market corporates have become a significant component of portfolio strategy because of their growing size, historically attractive risk-adjusted returns and portfolio diversification benefits,” said Anne Milne, head of Global Emerging Markets Corporate Credit Research. Emerging Market economies also continue to grow in importance globally, which leads to increased capital needs among Emerging Market companies. “As sovereign debt declines in importance, traditional emerging markets investors are replacing it, at least in part, with corporate debt. Moreover, traditional high-grade and high-yield investors are using emerging markets corporate bonds to enhance the yield on their portfolios and achieve better diversification,” she added.
“The Emerging Markets Corporate Plus Index gives investors an inclusive picture of the historical structure and relative risk and return characteristics of this rapidly growing asset class,” said Phil Galdi, head of Global Bond Index Research. Since its chosen start date, December 31, 1998, the Emerging Markets Corporate Plus Index has grown from $38 billion in total market capitalization to over $600 billion currently, a 26 percent annualized rate of expansion, showing Emerging Market corporates and quasi-governments to be one of the fastest growing segments of the global bond markets. “The Liquid Index captures the most active segment of this market and puts limits on key risk exposures, making it a valuable performance benchmark for portfolios dedicated to this asset class,” he added.
Index compositions
The Emerging Markets Corporate Plus Index includes corporate and quasi-government debt of qualifying countries, but excludes sovereign and supranational debt. The index is rebalanced monthly and constituent securities are capitalization weighted. Currently, the index includes 875 bonds with exposure to 47 countries having a total market capitalization of $601.2 billion. The index is complemented by 16 sub-indices that segment the market by currency, rating, region and sector.
EMCB Index qualifications for inclusion:
- Issuer must have risk exposure to countries other than members of the FX G10, all Western European countries, and territories of the U.S. and Western European countries.
- Individual securities of qualifying issuers must be denominated in U.S. dollars or euros, must have at least one year remaining term to final maturity and a fixed coupon.
- Investment grade rated bonds of qualifying issuers must have at least 250 million (EUR or USD) in outstanding face value, while below investment grade rated bonds must have at least 100 million (EUR/USD) in outstanding face value.
The U.S. Emerging Markets Liquid Corporate Plus Index includes corporate and quasi-government debt of qualifying countries, but excludes sovereign and supranational debt. The index is rebalanced monthly and constituent securities are capitalization-weighted, subject to a 2 percent issuer cap and a 10 percent country cap. Currently, the index includes 537 bonds with exposure to 36 countries having a total market capitalization of $460.4 billion. The index is complemented by 14 sub-indices that segment the market by rating, region and sector.
EMCL Index qualifications for inclusion:
- Issuer must have risk exposure to countries other than members of the FX G10, all Western European countries, and territories of the U.S. and Western European countries.
- Individual securities of qualifying issuers must be denominated in U.S. dollars, must have at least one year remaining term to final maturity and a fixed coupon.
- Investment grade rated bonds must have at least $500 million in outstanding face value and sub-investment grade rated bonds must have at least $300 million in outstanding face value.
The Emerging Markets Corporate Indices are compiled daily and are available, along with BofA Merrill Lynch’s entire complement of over 4,000 bond indices, on a wide variety of distribution platforms, including the BofA Merrill Lynch Global Index System, which can be accessed on Bloomberg (IND<Go>), or the BofA Merrill Lynch Index website at www.mlindex.ml.com.
The goal of BofA Merrill Lynch Global Research is to be the premier global research franchise, providing clients with exceptional service, value-added investment insights and alpha-generating investment recommendations. Its global team of analysts provides investment recommendations on more than 3,200 stocks and 880 credits, while its economists and strategists provide market forecasts for nearly 60 countries and recommendations on 40 currencies.
The group was named 2010 Top Global Broker (second consecutive year), Top Europe Broker, No. 2 U.S. Broker, and No. 3 Asia broker by Financial Times/StarMine. The team was also named Best Brokerage by Forbes/Zacks for the second consecutive year and the 2010 winner of the Emerging Markets magazine’s EM Research Global Award. In addition, the group was named No. 1 in the 2010 Institutional Investor All-Emerging Europe and All-Latin America Research team surveys, No. 3 in the 2010 Institutional Investor All-America Equity, All-America Fixed Income surveys, and most recently No. 3 in the 2011 All-Europe Research Team survey.
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with more than 5,800 retail banking offices and approximately 18,000 ATMs and award-winning online banking with 29 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a registered broker-dealer and a member of FINRA and SIPC, and, in other jurisdictions, locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed.