The Tel Aviv Stock Exchange (TASE) Board of Directors approved the launch of a new index – Tel Bond Non-linked, the eleventh Tel Bond index calculated by TASE. The new index will be launched on January 20th, 2015. It is anticipated that the index will include 74 bond series with a 2% weight cap limit, issued by 45 issuers with a market capitalization of approx NIS 50 billion.
The quality of the new index is grounded, among other things, in the diversity of its constituent bonds. The current ratio between floating interest rate and fixed rate bonds in the new index (60% fixed and 40% floating) is more balanced than the “parallel” Israel government bond index (85% fixed/15% floating).
The base price of the new index will be the reference index price of the Tel Bond –Composite index set on the trading day preceding the index launch date.
Instruments tracking the non-linked government bond index have grown by approximately 130% over the past year, reaching NIS 300 million. Considering the fact that the volume of instruments tracking Tel Bond indices is four times larger than that of instruments tracking government bonds, the expectation is that the new index will be quite successful. The launch of the new index is part of TASE’s policy of offering a wide array of Tel Bond indices. The launch will likely create demand that will contribute to the development of this sector of corporate bonds, which is characterized by investment grade issues with short duration.
