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Barclays Capital achieves inflation market first with emerging market indices


Barclays Capital, the investment banking division of the UK’s Barclays Bank, has announced the launch of a family of local currency emerging market government inflation-linked bond benchma

Barclays Capital, the investment banking division of the UK’s Barclays Bank, has announced the launch of a family of local currency emerging market government inflation-linked bond benchmark indices.

This is the first time that a full family of indices has been available to asset managers and institutional investors looking for a representative benchmark for government inflation-linked debt within developing nations. They were created by the Barclays Capital index products group and approved by the firm’s independent inflation-linked index committee.

Individual indices track the performance of inflation-linked bonds issued by the governments of Argentina, Brazil, Chile, Colombia, Mexico, Poland, South Korea and Turkey. These indices, along with the existing Barclays/BESA South African Inflation-Linked Bond Index, are used to create indices tracking debt within Latin America, Asia and the region comprising Eastern Europe, the Middle East and Africa. All of these component indices form the Emerging Market Government Inflation-Linked Bond benchmark index.

‘The new emerging market government inflation-linked bond indices are another step forward in the development of these markets and is testament to the growing demand for exposure to inflation across the globe,’ says Diego Gradowczyk, managing director and head of Latin America credit/rates and EMEA credit trading at Barclays Capital.

Waqas Samad, the firm’s head of index products, says: ‘These new benchmark indices complement and build on our existing family of inflation indices, underscoring Barclays Capital’s commitment to the inflation-linked market and to meeting investors’ needs for diversification in emerging markets.’

Barclays Capital will also make customised indices available and provide support and analytics for these indices via web-based and other e-commerce facilities. The indices are calculated daily and use standard settlements and market calendars most appropriate for international investors.

The Barclays Capital Emerging Markets Government Inflation-Linked Bond Index measures the total return performance of inflation-linked bonds from the major emerging market countries. The index includes government debt, that is, direct obligations of the state issuer, but quasi-government and corporate debt is not included.

The index currently consists of 43 bonds from nine countries and has an overall market worth of around USD200bn. The five Latin American markets account for around 90 per cent of the overall index capitalisation. Brazil is the largest market with a weight of about 66 per cent.

Daily historical index levels and statistics are available back to January 2004, with longer histories for individual countries or regions where available. As well as an overall index, sub-indices are available by country, region and maturity. Return series are calculated daily in local currency and both are hedged and un-hedged in a variety of currencies.

Barclays Capital is a specialist in inflation-linked products as a market-maker in inflation-linked securities, a lead manager of issuance and a provider of cash, derivatives and structured note products. It is also a leader in the inflation-linked derivatives market and has a global research team dedicated to the inflation-linked asset class focusing on all aspects of bond and inflation derivatives.

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