Sections
SSgA Adds 2 Corporates To Crowded Pipeline
February 17, 2012 12:33 pm
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State Street Global Advisors, the fund sponsor behind the world’s largest ETF, “SPY,” filed paperwork with U.S. regulators to market two fixed-income ETFs that will target U.S. and emerging market corporate bonds, the latest in a recent wave of corporate bond ETFs that have entered the product pipeline. The SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF will invest in dollar-denominated emerging market debt that is traded in the U.S. and Eurobond markets through a portfolio that caps single issuers at 5 percent, the company said in the filing. The SPDR BofA Merrill Lynch Crossover Corporate Bond ETF, meanwhile, will hone in on the U.S. corporate bond market and consist of triple-B and BB-rated dollar-denominated corporate debt. The fund will include what’s known as “crossover corporate bonds,” which are those securities sitting where the lower end of investment grade and the higher end of high yield debt meet. SSgA’s filing comes at a time when fund providers appear to be fine tuning their fixed-income offerings, designing more focused exposure to various segments of the bond market in an effort to find income opportunities when yields on Treasury bills are too meager on longer-dated debt to justify the risk. Corporate bonds have become more popular as companies’ balance sheets appear more healthy than they did prior to the 2008 credit crisis. While they still yield more than Treasurys of comparable maturities, plenty of investors view corporates as less risky than government bonds issued by heavily indebted developed countries. San Francisco-based iShares, for instance, has rolled out seven bond ETFs this week alone, and put another four in registration, most of which canvass various pockets of the corporate-bond landscape. New York-based Van Eck was another provider to put six corporate bond ETFs into the regulatory pipeline in the past couple of weeks. SSgA’s emerging market bond fund would include bonds with at least one year to maturity, a fixed coupon, and a minimum of $500 million in outstanding face value. The company’s crossover portfolio, which is capitalization-weighted and caps single issuers at 2 percent, would invest in bonds with at least one year to maturity, fixed coupon and at least $250 million of outstanding face value, the filing said. SSgA didn’t disclose tickers or fees in the filing.
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