The Bond Exchange of South Africa and Standard Bank launch new credit indices

The Bond Exchange of South Africa (BESA) and Standard Bank today announced the introduction of a set of three new indices against which to compare the performance of individual credit instruments. The Standard Bank BESA Credit Indices were designed as a tool for investors to choose the benchmark most appropriate for their credit portfolios.

According to Garth Greubel, CEO of BESA, "The South African bond market's continued growth has generated a clear investor need for a reliable and independent measure of the performance of a market sampling that encompasses most of the credit sector. The collaboration between BESA and Standard Bank was undertaken to provide the market with a more inclusive benchmark index to track the evolution of the credit market".

The three new indices - Credit-Fixed, Credit-Floating and the Credit-Composite -  were designed to cover a particular class of credit instruments that are neither issued by, nor guaranteed by, government, regardless of whether they are issued by state-owned or private-sector enterprises.  The Credit-Composite Index is a weighted average index of the Credit-Fixed and Credit-Floating indices.

"The Business Mathematics and Informatics (BMI) indices have clear and transparent rules, with a standardised valuation process, which complements, and serves as an extension to, BESAs existing indices. The balance between completeness and investibility will add to the indices' objective of being used as a local benchmark," added Greubel.  The indices are audited by the Centre of Business Mathematics and Informatics of the University of North-West.

Commenting on the new indices launch, Head of Global Markets Research at Standard Bank Robert Van Eyden said, "We are delighted to be launching the Standard Bank BESA Credit Indices today in partnership with BESA. It is our firm belief that these indices will assist BESA users to better evaluate and benchmark their credit portfolios. Standard Bank Global Markets Research is committed to providing value-added and innovative research across the fixed income spectrum. The launch of these credit indices will provide a platform from which to expand our existing credit research and develop credit portfolio research."

According to Greubel, "The indices will further enhance BESA's stated objective of building better markets.  The growth of corporate credit issues, encouraged by BESAs low issue costs and flexibility, will add to the growth potential of the bond market going forward".