BofA Merrill Lynch Global Research has launched four emerging markets local currency bond indices to track the performance of local currency non-sovereign emerging markets fixed rate debt.
The new series includes four flagship indices: Broad Local Emerging Markets Non-sovereign Index (LCCB), Diversified Broad Local Emerging Markets Non-sovereign Index (LCCD), Local Emerging Markets Non-sovereign Index (LOCM), and Diversified Local Emerging Markets Non-sovereign Index (LOCL).
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The company said that all the four indices will focus solely on securities that settle on Euroclear, the portion of the market that is readily accessible to offshore investors.
The four primary indices are complemented by an extensive suite of 33 sub-indices that segment the market by currency, rating and sector and offer investors a granular view of the market.
Anne Milne, head of global emerging markets corporate credit research, said: "With a unique combination of risk characteristics, this asset class is rapidly gaining the attention of emerging markets fund managers, but to date there has been no index coverage to shed light on market structure and performance.
"These new indices provide an established performance benchmark in order to facilitate a comprehensive investment process," Milne added.
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By GlobalDataPhil Galdi, head of global bond index research, said: "The introduction of local currency credit market indices does more than just add currency exposure to the credit risks already tracked through existing external emerging market corporate indices.
"While there are some similarities between our external emerging markets non-sovereign index (EMCB) and the new local index (LCCB), they are different in one key aspect – name exposures. Less than half of the names that appear in the local index are also in the external index and only a quarter of the names in the external index also appear in the local index," Galdi added.
