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iShares launches Euro high yield bond ETF


iShares, the exchange-traded funds platform of BlackRock, has launched the first Euro high yield bond ETF offering investors a liquid and diversified access route to the European high yield debt market.

The iShares Markit iBoxx Euro High Yield fund addresses the liquidity concerns that have previously made it difficult for investors to access European high yield, by offering exposure to nearly 100 of the most liquid sub-investment grade corporate bonds.

The Markit iBoxx Euro Liquid High Yield index, designed by Markit, uses multiple pricing sources and is based on an average of the ratings allocated to each debt instrument by Fitch, Standard & Poor’s and Moody’s to determine inclusion in the index.

The index is owned and managed independently by Markit. Almost two-thirds of the constituent bonds are currently BB-rated with only five per cent allocated to CCC-rated bonds.

In terms of sector breakdown, consumer goods, industrials and basic materials constitute almost half of the index weighting, with no single holding currently making up more than two per cent of the index.

Blanca Koenig, fixed income strategist at BlackRock, says: "Investor appetite for European high yield exposure has developed in recent years, and iShares is pleased to offer clients exposure to a sector that has traditionally been hard to access.

"iShares has put innovation at the heart of its approach and partnered with Markit to offer this first physically backed Euro high yield corporate bond ETF. Importantly, they share our rigorous standards for transparency coupled with an outstanding reputation for building credit benchmark indices."

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