ProShares Trust, the Bethesda, Md.-based firm known for its inverse and leveraged strategies, filed paperwork with U.S. regulators to market a fixed-income ETF that will invest in sovereign debt of non-U.S. countries deemed to be on solid fiscal ground.

The ProShares Sovereign Fiscal Strength ETF will track an index of fixed-rate debt denominated in local currencies from countries that are well managed in terms of debt-to-GDP ratios, deficit-to-GDP ratios and current account balances. The credits will also be chosen based on governance and institutional factors, ProShares said.

With the U.S. and much of the rest of the developed world stuck in a slow slogging recovery since the market crash of 2008, much attention is focused on countries relatively free of debt, many of them in the developing world. Countries like Germany that have weathered the global financial crisis loom largely too.

Indeed, ProShares, known for its inverse and leveraged strategies, filed regulatory paperwork in September to offer a fixed-income ETF that would focus on German sovereign debt. Also, Pimco, the world’s biggest bond fund manager, recently launched a Germany Bond Index Fund (NYSEArca: BUND) that has gathered $13 million in its first week.

Portfolio Composition

The investment-grade-only basket of debt securities must have at least one year to maturity, and no single issuer may represent more than 24 percent of the overall portfolio, the company said in the filing.

What’s more, companies representing 5 percent or more of the basket, when combined, cannot exceed 50 percent of the overall pie, it added.

The ETF, which will track its benchmark through representative sampling, will invest not only in bonds, but also in derivatives such as swap agreements and futures contracts, as well as in money market instruments such as U.S. Treasury Bills.

ProShares also said that regardless of its view of the “investment merit” of a particular security, it will remain fully invested in a mix of securities and derivatives that, combined, provide exposure to its index “without regard to market conditions, trends or direction.”

The portfolio is rebalanced quarterly. No ticker or fees were disclosed in the filing.