S&P Dow Jones Indices and B3 S.A. Launch the S&P/B3 Corporate Bond Indices

Rhea-AI Summary

S&P Dow Jones Indices and B3 have launched two new bond indices for Brazil's domestic corporate bond market, marking a significant addition to fixed income indices. The S&P/B3 Brazil IPCA Corporate Bond Index and the S&P/B3 Brazil Liquid IPCA Corporate Bond Index will track local currency debentures linked to the IPCA, with the latter focusing on liquidity criteria. These indices aim to provide institutional investors with objective benchmarks for tax-beneficial bonds, enhancing market visibility and supporting new tradeable product creation, including ETFs. The methodology includes rules-based selection and market value weighting, ensuring appropriate liquidity representation. This initiative reinforces S&P DJI's commitment to expanding its offerings in Brazil's financial market.

Positive

• Launch of two new bond indices enhances S&P DJI's product offerings in Brazil.
• Indices provide institutional investors with objective benchmarks for tax-beneficial bonds.
• Increased market visibility and potential for new tradeable products like ETFs.
• Utilizes market value weighting and liquidity criteria for enhanced index reliability.

Negative

• None.

SÃO PAULO, April 13, 2023 /PRNewswire/ -- S&P Dow Jones Indices ("S&P DJI"), the world's leading index provider, and B3, the exchange of Brazil, today announced the debut of two new bond indices, the first in a series of fixed income indices for Brazil's domestic corporate bond market.

The series of indices include the S&P/B3 Brazil IPCA Corporate Bond Index and the S&P/B3 Brazil Liquid IPCA Corporate Bond Index, which measure the performance of local currency domestic debentures linked to the Índice Nacional de Preços ao Consumidor Amplo (IPCA). The S&P/B3 Brazil Liquid IPCA Corporate Bond Index includes additional liquidity criteria.

The indices use a rules-based selection criteria based on relevant fixed income principles to select and weight its constituents. The objective is to measure core exposure to incentivized debentures, or tax-beneficial bonds, a key segment of the bond market.

"The S&P/B3 Corporate Bond Indices are the latest addition of fixed income indices that expand our offering in Brazil," said Frans Scheepers, Head of Fixed Income, Currency and Commodity Products at S&P Dow Jones Indices. "We have designed these bond indices to offer broad coverage of the IPCA-linked debenture market, providing institutional investors with objective benchmarks which they can use to measure and execute their market views. We're pleased to work with the B3 to bring more visibility to the Brazilian corporate bond market and support tools for new tradeable product creation."

"The indices will allow the launch of new products such as exchange-traded funds and other index-based funds, and help facilitate an accessible channel for investors wishing to track tax-beneficial bonds. New products such as these indices help bring diverse exposures to client portfolios with respect to the Brazilian fixed income market," said Henio Scheidt, Index Manager at B3.

The new corporate bond indices will complement the existing fixed income offering in Brazil, which includes the S&P/B3 Brazil Sovereign Inflation-Linked Bond Index and the S&P/B3 One-Day Interbank Deposit 3Y Futures Index.  

Index Methodology

S&P Dow Jones Indices use a variety of criteria in constructing and maintaining fixed income indices.

A majority of S&P Dow Jones fixed income indices are market value weighted, where each bond's weight in the index is proportional to its market value. In this case, and to be eligible for index inclusion, bonds must have a minimum market value of BRL 100 million.  

The S&P/B3 Brazil Liquid IPCA Corporate Bond Index uses the prior three months to determine eligible debentures based on trading volume, which must have a median value traded of BRL 100,000. It is a capitalization-weighted index, also known as a market value-weighted index, to ensure adequate liquidity is represented throughout its constituents.

Please visit www.spdji.com for more information about the methodology behind the S&P/B3 Bond Indices. For the full range of credit scales, symbols and definitions used by each Nationally Recognized Statistical Rating Organizations, please refer to each respective agency's website.

ABOUT S&P DOW JONES INDICES

S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets.

S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit https://www.spglobal.com/spdji/en.

ABOUT B3

B3 S.A. (B3SA3) is one of the world's leading financial market infrastructure companies and one of the largest by market capitalization among the global leaders in the exchange industry. It connects, develops and makes the financial and capital markets viable and, together with customers and society, boosts Brazil's growth.

It operates in the exchange and over-the-counter environments, in addition to offering products and services for the financing chain. Headquartered in São Paulo and with offices in Chicago, London, Singapore and Shanghai, it plays important roles in the market by promoting best practices in corporate governance, risk management and sustainability.

B3. With the market, for the future.

The S&P/B3 Corporate Bond Indices are products S&P Dow Jones Indices LLC or its affiliates ("SPDJI").  S&P® is a registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); B3® is a registered trademark of B3 S.A. These trademarks have been licensed for use by SPDJI. Investment products based on the S&P/B3 Corporate Bond Indices are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Indices.

FOR MORE INFORMATION:

S&P Dow Jones Indices
Alyssa Augustyn
Americas Communications
(+1) 773 919 4732
alyssa.augustyn@spglobal.com 

B3
+55 11 2565 7639
imprensa@b3.com.br

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/sp-dow-jones-indices-and-b3-sa-launch-the-spb3-corporate-bond-indices-301796477.html

SOURCE S&P Dow Jones Indices

FAQ

What are the new bond indices launched by S&P DJI and B3?

S&P DJI and B3 launched the S&P/B3 Brazil IPCA Corporate Bond Index and the S&P/B3 Brazil Liquid IPCA Corporate Bond Index.

What is the purpose of the new S&P/B3 bond indices?

The new indices aim to provide benchmarks for local currency debentures linked to the IPCA, focusing on tax-beneficial bonds.

How do the S&P/B3 bond indices impact institutional investors?

They offer objective benchmarks that help institutional investors measure and execute market views on tax-beneficial bonds.

What criteria are used in the S&P/B3 Brazil Liquid IPCA Corporate Bond Index?

The index uses liquidity criteria based on trading volume and market value, requiring a median value traded of BRL 100,000.

When was the S&P/B3 Corporate Bond Indices officially announced?

The indices were announced on April 13, 2023.