State Street’s (NYSE: STT) State Street Global Advisors, the second-largest U.S. ETF issuer, is adding to its stable of high-yield bond exchange traded funds today with the introduction of the SPDR Barclays International High Yield Bond ETF (NYSEArca: IJNK).
The SPDR Barclays International High Yield Bond ETF will the Barclays Global ex-US Issuers High Yield Corporate Bond Index, a measure of ex-U.S. high yield fixed corporate income markets.
The securities in the index must have a minimum $350 million market capitalization outstanding in local currency terms and at least one year remaining to maturity. Additionally, securities must be rated high yield (Ba1/BB+/BB+ or below) using the middle rating of Moody’s Investors Service, Standard & Poor’s and Fitch, according to a statement issued by State Street.
IJNK excludes convertible bonds, floating rate notes, warrants, linked bonds and structured products. As of February 28, 2014, the index was comprised of 716 securities from 46 countries outside the U.S., according to the statement. IJNK carries an annual expense ratio of 0.4%.
While the U.S. remains dominant issuer of high-yield corporate bonds, foreign issuers are increasing their presence. For example Europe’s junk bond issuance more than doubled to over $76 billion last year. In 1997, international junk bonds accounted for less than 11% of the global high-yield corporate bond market, but that number jumped to 44% in 2012, according to Bank of America Merrill Lynch data.