BBB-rated Canadian corporate bonds represent an increasingly larger proportion of the Canadian corporate bond market, according to analysis from global multi-asset index provider FTSE Russell.
As of January 31, the FTSE Canada 1-10 Year Corporate BBB Bond Index had 326 issuers representing approximately $141.1 million (CAD) in market cap. This translates to 29% of the total market cap of the FTSE Canada All Corporate Bond Index as compared to 287 issuers and 42% market cap percentage for the FTSE Canada 1-10 Year Corporate A+ Bond Index. This picture looked much different on January 30, 2004, when just 105 BBB-rated Canada corporate bonds represented 14% of the market cap of the FTSE Canada All Corporate Bond Index and 304 A+ issuers represented 66% of the FTSE Canada All Corporate Bond Index.
Marina Mets – head of Americas fixed income and multi-asset index product management, FTSE Russell:
“The past few decades have seen an increase in the proportion of the Canada corporate bond universe with BBB rating. This highlights the importance of providing investors with tools and information necessary to track and understand the history and the nuances so they can be better prepared to make educated investment decisions around quality, duration and yield, particularly in an environment of historically low interest rates. Having fixed income benchmarks that accurately and transparently measure this market over time for investors is critical.”
The FTSE Canada 1-10 Year Corporate BBB Bond Index and FTSE Canada 1-10 Year A+ Corporate Bond Index serve as the basis for two new ETFs recently introduced by BMO Asset Management, Inc.
Mark Raes, head of product, BMO Global Asset Management:
“The changing nature of the Canada fixed income market underscores the need for investors to have strong tools to gain exposure to different market segments. The position investors take on certain considerations, such as credit quality and maturity spectrum, are unique to individual investors. However, by having better visibility into the into the credit picture for the Canada corporate bond market, investors will be able to make more informed investment decisions.”
FTSE Russell has been serving Canadian investors for nearly four decades and provides a broad choice of indexes, analytics and market data to help investors better measure the Canada and global equity and fixed income markets. Visit the FTSE Canada page for more information.
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