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ProShares launches first corporate bond fund with all assets rated AAA
By Toni Weeks
San Diego, May 23 - ProShares said it has launched the only corporate bond fund - mutual fund or exchange-traded fund - with substantially all of its assets rated AAA.
The ProShares USD Covered Bond trades on the NYSE Arca under the symbol "COBO."
The fund invests in covered bonds, a type of collateralized corporate debt typically issued by non-U.S. financial institutions. Covered bonds are different from typical U.S. corporate debt, because in the event of a default, covered bondholders have both a senior unsecured claim against the issuer and a preferential claim to a segregated, actively maintained "cover pool" of assets, qualifying the bonds as a high-credit-quality investment. A popular investment outside of the United States, with a global market of about $3 trillion outstanding, covered bonds have not been broadly accessible in the United States.
"Many investors are interested in high-credit-quality bonds, but the supply of AAA-rated corporate debt in the United States is very limited," Michael L. Sapir, chairman and chief executive officer of ProShare Advisors LLC, the fund's investment adviser, said in a press release. "COBO, a first-of-its-kind ETF, fills the gap by accessing the highest-rated segment of the $3 trillion, 240-year-old covered bond market."
The fund seeks to match the performance, before fees and expenses, of the BNP Paribas Diversified USD Covered Bond Index, which tracks the performance of a portfolio of dollar-denominated, AAA-rated covered bonds. Each bond must be AAA-rated by at least one independent rating agency.
ProShares, based in Bethesda, Md., is a provider of alternative ETFs.
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