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The first independent performance benchmarks for UK retail bonds

FTSE Group (“FTSE”), the award winning global index provider, today announces the launch of the FTSE ORB Index Series which has been developed in conjunction with Investec Bank plc (‘Investec’).

The indices are the first performance benchmarks for bonds trading on ORB – London Stock Exchange’s Order book for Retail Bonds. The indices offer investors and product issuers transparency, measurability and new access opportunities in UK retail bonds. The launch of the indices reflects surging investor interest in the UK retail bond market, which has raised £3 billion through new issues since its launch in 2010. 

The FTSE ORB Index Series is a transparent, rules-based index developed and managed in accordance to FTSE’s world class standards of index design. The indices include retail bonds, covering a range of industry sectors and will show the yield, maturity date and trading performance of these bonds. Investec helped to established the feasibility of the index, define the index’s methodology and, alongside FTSE, determined the selection criteria.

Sudir Raju, FTSE’s Managing Director of ETP Relationships, said:  “We are delighted to announce the launch of the FTSE ORB Index Series.  We started work on this index earlier last year alongside the Analytics team at Investec and with the input from London Stock Exchange’s ORB platform. For the first time, we can now offer a set of measurable performance metrics for retail fixed income investment portfolios based on corporate bonds listed on ORB. As the market continues to grow, it will also enable the development of new investible access products which provide greater investor choice.”

Pietro Poletto, Head of Fixed Income Markets at London Stock Exchange Group, said: “The launch of the FTSE ORB Index Series reflects the growing interest from retail investors for access to fixed income products. The new indices will provide the UK’s first benchmarking tools for bonds listed on London Stock Exchange’s Order book for Retail Bonds and signifies the next step in the development of this growing market, since it was launched three years ago.”

Michael Smith of Investec’s Debt Capital Markets team, who worked with his Analytics team on the development of the index methodology, said: “Every market should have an index and the need to launch a retail bond index that investors, issuers and arrangers can track has become increasingly apparent.  Investec has been a firm supporter of ORB since its inception and the FTSE ORB Index Series will respond to the need from the marketplace for aggregated, easily comparable data. We believe that the FTSE ORB Index Series will be extremely helpful to retail investors, distributors and potential issuers.  The index will offer investors an opportunity to benchmark their retail bond portfolios against a transparent and rules-based index– this is a really great market development.”

Eligibility screening is applied to constituents to ensure the accuracy, replicability and representativeness of the index:

  • Constituent is traded on ORB

  • It is sterling denominated

  • It is a corporate bond

  • It is a fixed coupon bond

  • It has more than a year until maturity left

  • It is not a perpetual bond (i.e. it has a maturity date)

  • It is not contingent convertible

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