The MCB India ETF will be created, domiciled and listed in Mauritius and start trading on the Stock Exchange of Mauritius on 6 June 2016.
The initial offer period of the fund will close on 27 May 2016.
MCB Capital Markets is the sponsor and promoter of the ETF, and Singapore-headquartered asset manager ZyFin is the investment adviser.
“Close to 50% of investments in India go through Mauritius and we plan to capitalise, through this ETF, on the special relationship between our two countries while providing easy access to the Indian sovereign debt market, one of the largest and most attractive bond markets in the world,” said Gilbert Gnany, chairman of the MCB India Sovereign Bond ETF.
Indian debt access
The Indian sovereign bond market has traditionally been difficult for foreign investors to access because of minimum investment thresholds, ceilings on foreign holdings and other regulatory processes, said the issuers.
“ZyFin is committed to offering exposure to difficult to reach but growing emerging markets,” said Sanjay Sachdev, executive chairman of ZyFin. “With the MCB India Sovereign Bond ETF and our successful listed LAM Sun Global ZyFin Sovereign Enterprise Bond ETF, we are delivering on that promise.”
The ETF will replicate the ZyFin India Sovereign Bond Liquid Index, which tracks the performance of the most liquid, fixed rate, Indian rupee denominated bonds issued by the government of India.
It is a global, open-ended scheme and will invest in the most liquid sovereign bonds with a typical maturity between 8 and 13 years. The ETF will provide investors with regular short-term returns through the payment of half yearly dividends in US dollars and the potential for capital appreciation.
India’s sovereign bond market is one of the world’s largest with outstanding issuances in excess of $650bn (£448.8bn, €567.7bn). India, Asia’s third largest economy, is expected to grow at an average of 7.6% per annum over the 2016-2021 period, according to IMF estimates.