State Street Introduces 2 New Corporate Bond ETFs


State Street’s STT -0.55% State Street Global Advisors unit, the second-largest U.S. ETF sponsor, will introduce two new bond ETFs on Tuesday.

The SPDR BofA Merrill Lynch Crossover Corporate Bond ETF will track an index that offers exposure to dollar-deonominated U.S.-issued BBB and BB-rated corporate debt. BBB is the lowest investment grade rating and BB is a non-investment grade rating.

Qualifying securities must have at least one year remaining term to maturity, a fixed coupon schedule and a minimum amount outstanding of $250 million. Original issue zero coupon bonds, 144a securities, both with and without registration rights, and pay-in-kind securities, including toggle notes, qualify for inclusion. Callable perpetual securities qualify provided they are at least one year from the first call date. Fixed-to-floating rate securities also qualify provided they are callable within the fixed rate period and are at least one year from the last call prior to the date the bond transitions from a fixed to a floating rate security, according to XOVR’s prospectus.

SSgA will also introduce the SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF . Other ETF sponsors have already found success with emerging markets corporate bond ETFs, a fact that could either bode well for the SPDR BofA Merrill Lynch Emerging Markets Corporate ETF or indicate the ETF is late to the party.

The WisdomTree Emerging Markets Corporate Bond Fund EMCB +0.42% , which debuted in March, now has almost $60 million in assets under management. The iShares Emerging Markets Corporate Bond Fund (bats:CEMB), which debuted in April, has over $10 million in AUM.

Expense ratios were not included in the prospectus for either XOVR or EMCD.