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Today (July 8th, 2018), a new corporate bonds index was launched – the “Tel Bond-Dollar Index”. The index consists of dollar-linked corporate bonds listed on the Tel-Aviv Stock Exchange (“TASE”). Following the launch of the new index, TASE will be calculating 29 Tel Bond indices, 10 of which were launched in 2017 and 6 of which were launched since the beginning of 2018.
The new index was formulated by TASE to expand and diversify the products traded on TASE. In light of the fact that the yield on dollar-linked corporate bonds is higher than the yield on CPI-linked and shekel bonds, the launch of products that will track the Tel Bond-Dollar index which based on highly-rated dollar-linked bonds listed on TASE, is likely to be attractive for investors. Major Investors expects high demand for the lucrative index. According to some estimates, the launch might encourage certain companies to issue dollar-linked bonds, including foreign companies that have already issued bonds in Tel Aviv. Moreover, products tracking the index will also serves as a hedging tool exposure to volatility in the shekel/dollar exchange rate.
The Tel Bond-Dollar Index will be composed solely of dollar-linked bonds, which have been rated with at least an A- rating by Maalot or an A3 rating by Midroog. The maximum weight for any bond series that will be included in the index will be 12% and the maximum number of series for a single issuer will be limited to two (in other words, the maximum weight per issuer will be 24%).
Key statistics of the Tel Bond-Dollar Index are as follows:
- Market cap. - approximately NIS 24 billion
- Number of series – 13
- Number of issuers – 10
- Weight of largest Issuer (Tamar Petroleum) – 24%
- Dominant sub-sector – oil and gas exploration (57%)
- Weighted gross IRR – 5.7%
- Weighted duration – 4.2 years
- Dominant characteristic – Companies from the oil and gas exploration sector
Due to the high yield of the index in relation to the rating segment of the bonds included therein, the index will be placed in the “local bond yields family,” alongside the Tel Bond-Yields Index, the Tel Bond-Yield NIS Index and the Tel Bond-Global Index.
The record date for determining the composition of the index was at the close of trading on June 21st, 2018.
For the composition of the index and details of the Tel Bond-Dollar Index, see the attached link to the TASE website:
