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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.