NEW YORK, NOVEMBER 16 -- Morgan Stanley Capital International, Inc. (MSCI), a leading provider of global indices and benchmark related products and services to investors worldwide, today announced its entry into the global fixed income benchmark market with the launch of an investment grade MSCI Euro Credit Index and the MSCI Sovereign Debt Indices. International institutional investors can use these new MSCI Fixed Income Indices as benchmarks, particularly in preparation for the planned adoption of the Euro as the national currency by 11 of the 15 EMU zone countries on January 1, 1999.
The advent of the Euro means that the traditional outperformance strategy of some portfolio managers by selecting markets with appreciating currencies will soon be outdated in Europe. Managers will then be judged on their ability to outperform by selecting the right mix of credits. A benchmark for these credits will be the MSCI Euro Credit Index.
The MSCI Euro Credit Index (see attached details) is designed to be a broad-based benchmark for the sovereign and credit bond markets. It will include fixed rate debt denominated in the Euro, or the various EMU currencies, and rated as investment grade. It will specifically exclude private placement issues and debt that is designed for the retail investor.
Commenting today on the new series of indices, Mr. Henry Fernandez, President of MSCI, said: "As a global index provider for 30 years, we are accustomed to responding to the evolving needs of investors and their benchmarks. The start of EMU in January 1999 will provide the opportunity and the demand for an investment grade Euro Credit Index. EMU will create a large, unified and liquid bond market that will constitute approximately 25% of the global debt markets and benchmark indices will be required both for performance measurement and for investment analysis."
Mr. Benjamin Wolkowitz, Managing Director and head of MSDW's Fixed Income Research Group, said: "The aim of the MSCI Euro Credit Index will be to provide a replicable and transparent suite of indices covering all liquid and relevant subsets of the headline index. It will cover both the sovereign sector and all the internationally accessible components of the eurobond and domestic markets."
The series of MSCI Sovereign Debt indices are designed to complement the industry-standard MSCI global equity indices products and will therefore be performance benchmarks in local currency sovereign debt for both developed and emerging markets.
For Further Information:
MSCI (London)Suzanne CrosbyTel:+44 171 425 2144
email: [email protected]
MSDW (New York)Robert FuhrmanTel:+1 212 761 1738
email:[email protected]
MSDW (London)Jim DurrantTel:+44 171 425 7293
email:[email protected]
Tim BarrettTel:+44 171 425 7834e
email:[email protected]
NOTE TO EDITORS
MSCI Euro Credit Index
This index will consist of Investment Grade Fixed Interest Debt
- Denominated in Euro or in E11 legacy currencies as well as ECU
- Issued in domestic or eurobond global markets
This index will comprise issues of public companies of sufficient size to warrant institutional investor interest. Private placements, tax advantaged securities, and issues explicitly marketed to retail investors will be excluded. All issues must be available for purchase by investors of any nationality.
Sector classifications for debt included in MSCI Euro Credit Index:
- EMU Sovereigns
- Non-EMU Sovereigns
- Government Guaranteed
- Government Agencies
- Regionals
- Jumbo Pfandbriefe
- Financials
- Corporate/ Industrials
- Asset-Backed Issues
MSCI Sovereign Debt Indices
This index series will comprise 3 sets of total return indices for 32 countries as well as a number of associated regional and composite indices.
- Government bond indices for 20 developed markets
- Government bond indices for 5 emerging markets
- Total return swap-based indices for an additional 7 markets (developed and emerging)
- Regional sovereign debt indices that mirror the availability of regional MSCI equity indices
The bond indices will comprise issues of domestic government debt of sufficient size to warrant institutional investor interest. All issues must be available for purchase by investors of any nationality.
The total return swap-based indices will be created from a set of synthetic bonds created by pairing an interest rate swap contract with a floating rate security. These indices are available for those countries that lack liquid local government debt markets.
Features Common to Both Indices
- All issues are trader priced
- Complete coverage of relevant institutional markets
- Index construction rules are transparent and index returns achievable with low tracking error by portfolio managers
- Transaction costs explicitly accounted for in index returns
- Indices are priced daily
- Index information distributed through MSCI and MSDW web-sites as well as through Bloomberg, Reuters, and other distributors of MSCI data
- Index analytics available to MSDW client via the MSDW ClientLink
- Twenty-four hour support from MSCI client service
- Five years of daily history for most of the sub-indices
Morgan Stanley Capital International (MSCI)
Morgan Stanley Capital International Inc. (MSCI) is a leading provider of global indices and benchmark related products and services to investors worldwide. Morgan Stanley Dean Witter is the majority shareholder of MSCI, and The Capital Group Companies, Inc., a global investment management group, is a minority shareholder.
Morgan Stanley Dean Witter
Morgan Stanley Dean Witter is a global financial services firm and a market leader in securities, asset management and credit and transaction services. The company has offices in New York, London, Tokyo, Hong Kong and other principal offices around the world and has 429 securities branch offices throughout the United States.
