Commerzbank’s SME Covered Bonds Eligible for Barclays IndexEsteban Duarte
Commerzbank AG’s debut issue of covered bonds backed by loans to small- and medium-sized companies is eligible for inclusion in a benchmark index operated by Barclays Plc.
Pacific Investment Management Co. said this month that admission to indexes was “key” to the success of the 500 million euros ($653 million) of bonds the Frankfurt-based bank issued Feb. 21. BlackRock Inc., which oversees $3.79 trillion as the world’s largest money manager, said using SMEs to back the securities rather than safer real estate or public-sector debt may devalue the asset class.
The notes will be included in Barclays’s Global and Euro Covered Bond indexes, according to an e-mailed statement from Jodie Gray, a spokeswoman for the U.K. lender in London.
Banks are starting to seek alternatives to the real estate and public-sector debt traditionally used to collateralize the securities pioneered in 18th century Prussia. They’re running out of these safer assets to package into covered bonds, a process hastened by the meltdown of Europe’s property market.
Fitch Ratings said this month that at least two other lenders are preparing to follow Commerzbank with SME-backed issues.
Separately, Markit Group Ltd. said in a statement on its website that Commerzbank deal will be “provisionally” classified as collateralized in the company’ indexes. The company, which manages the Iboxx indexes, may consider including the deal in other performance benchmarks.
Karsten Swoboda, a spokesman for Commerzbank, referred questions to Barclays.