A Central European Treasury Index was launched by Lehman Brothers formally on 1 May, the accession day for the 10 new EU member countries. However, only bonds from Poland, Hungary, the Czech Republic and Slovak Republic are included.
These countries have bonds that meet all the criteria needed to be included in the index, the key factors being outstanding issue amounts of E300m, are rated investment grade by both Standard & Poor’s and Moody’s, have fixed rates, and more than one year to maturity, the investment bank says.
Altogether the index has 43 issues with a market value of E56bn. The index can be expanded as more countries join the EU.
“The other countries whose debt would be eligible to join the index are Estonia, Latvia, Lithuania and Slovenia,” says Lehman. A separate index will be created for Malta and Cyprus, when local sovereign issues meet the E300m outstanding issues.
In September, Lehmans will announce which new currencies will be added to its Global Aggregate Index and other regional aggregate indices as from 1 January 2005. Those included could be the currencies in the new CE Treasury index, as well as the Mexican and Chilean pesos, and South African rand. A similar exercise will be carried out yearly for eligible currencies, whose sovereign must be investment grade, and the currencies themselves must trade freely and be hedgeable.