A recent filing from iShares outlines the firm’s plans to launch an ETF that will target the bonds with the highest credit quality in the junk bond space. The iShares BB Rated Corporate Bond ETF that average a rating from the three major ratings agency that falls within the range of BB+ to BB-, which is the top tier of the high-yield category.
The fund’s underlying index selects its components from the ICE BofAML US High Yield Constrained Index and is weighted by market capitalization, with a 2% cap on the weight of any single issuer. The index covers only debt denominated in U.S. dollars with a maturity of at least one year and at least $250 million in outstanding face value. Securities can be issued by domestic and foreign issuers, the prospectus says.
BlackRock’s ETF lineup includes the iShares Aaa-A Rated Corporate Bond ETF (QLTA), which covers corporate bonds with only the highest credit quality. In August 2016, it closed down two similar funds, the iShares B - Ca Rated Corporate Bond ETF (QLTC) and the iShares Baa - Ba Rated Corporate Bond ETF (QLTB).
The filing does not include a ticker, expense ratio or listing exchange.
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