MCB Capital Markets (MCBCM) and ZyFin Holdings (ZyFin) have launched the MCB India Sovereign Bond ETF), the world’s first exchange traded fund (ETF) to provide international investors dedicated access to the Indian sovereign bond market.
The main objective of the MCB India ETF is to facilitate investment into the Indian sovereign bond market, an asset class which has traditionally been difficult for foreign investors to access because of minimum investment thresholds, ceilings on foreign holdings and other regulatory processes. India’s sovereign bond market is one of the world’s largest and most attractive with outstanding issuances in excess of USD650 billion. India, Asia’s third largest economy, is expected to grow at an average of 7.6% per annum over the 2016-2021 period based on IMF estimates.
The MCB India ETF will replicate the ZyFin India Sovereign Bond Liquid Index, which tracks the performance of the most liquid, fixed rate, Indian Rupee denominated bond issued by the Government of India. The MCB India ETF, a global open-ended Collective Investment Scheme domiciled in Mauritius, will be listed on the Stock Exchange of Mauritius and will invest in the most liquid sovereign bond with a typical maturity between 8 and 13 years. It will provide investors with regular short-term returns through the payment of half yearly dividends in US dollars and the potential for capital appreciation.
Gilbert Gnany, Chairman of the MCB India Sovereign Bond ETF, says: “We are pleased to partner with ZyFin on launching the MCB India Sovereign Bond ETF, the first ETF created, domiciled and listed in Mauritius. Close to 50% of investments in India go through Mauritius and we plan to capitalise, through this ETF, on the special relationship between our two countries whilst providing easy access to the Indian sovereign debt market, one of the largest and most attractive bond markets in the world.”
Sanjay Sachdev, Executive Chairman of ZyFin, says: “Backed by our expertise in asset management and structuring innovative ETFs, we are excited to work with MCBCM and offer this attractive investment solution to access the Indian sovereign bond market. ZyFin is committed to offering exposure to difficult to reach but growing emerging markets. With the MCB India Sovereign Bond ETF and our successful listed LAM Sun Global ZyFin Sovereign Enterprise Bond ETF, we are delivering on that promise. This partnership also helps us further our goal of providing investment opportunities to global investors in an easy, cost-effective and transparent manner.”
MCB Capital Markets is the sponsor and promoter of the MCB India ETF and has appointed ZyFin, which has extensive experience of Indian fixed income and emerging markets ETFs, as Investment Advisor. The initial offer period of the fund will close on 27 May 2016 and the MCB India ETF will start trading on the Stock Exchange of Mauritius on 6 June 2016.
