S&P Dow Jones Indices has rolled out a trio of fixed income indices aimed at Middle East, North African and Islamic investors.
S&P Dow Jones has unveiled a trio of bond and Sukuk indices aimed at MENA and Islamic investors. (© FritzDaCat)
They include the S&P MENA Bond & Sukuk Index and two sub-indices, the S&P MENA Bond Index and S&P MENA Sukuk Index.
The S&P MENA Bond & Sukuk Index comprises a universe of US dollar-denominated debentures that seeks to measure the performance of bonds and Islamic fixed income securities – also known as sukuk – in the Middle East and North Africa (MENA) region.
This region incorporates Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen.
The S&P MENA Bond Index comprises a universe of US dollar-denominated debentures that seeks to measure the performance of bonds issued by companies domiciled in the MENA region.
The S&P MENA Sukuk Index is designed to provide exposure to sukuk issued by companies domiciled in the MENA region
To be eligible for inclusion in these indices, each security must have a maturity greater than or equal to one year from the rebalancing date and a minimum par amount of $200 million at each rebalancing. Fixed or floating rate coupon instruments are eligible. The minimum credit rating for inclusion is BBB- / Baa3 / BBB-.
With the exception of the S&P MENA Bond Index, each of the indices is screened for Shariah compliance. The first criterion is to ensure that the issuance is certified by a reputable Shariah Supervisory Board. Secondly, it must comply with the Standards for Tradable Sukuk laid down by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). And finally, the underlying assets to be securitized in sukuk must be screened for Shariah principles.
The indices are market-value weighted, meaning the weight for each eligible issue is the market value of the issue as a percent of total index market value.
The total return is calculated by aggregating the interest return, reflecting the return due to paid and accrued interest, and price return, reflecting the gains or losses due to changes in the end-of-day price and principal repayments.
Commenting on the launch, Charbel Azzi, head of Middle East and Africa for S&P Dow Jones Indices, said: “The launch of these indices enhances S&P Dow Jones Indices’ fixed income footprint in the Middle East. The new MENA Bond and Sukuk indices will provide investors with a relevant and timely measure of the performance and trends in the sukuk sector.”