Top-rated sustainability

An impact investing alternative to US Treasury bonds

29 Jan 2019
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Multilateral Development Bank (MDB) bonds offer a highly rated, sustainable, and liquid yield enhancement for fixed income investors. UBS Asset Management has partnered with Solactive to develop a family of indices focused on the MDB bond market. MDB bonds are essentially a developing nation social and economic development capital source. They exhibit a solid and well established credit profile, both in terms of rating and implicit guarantees.

The Solactive UBS MDB Bond USD 25% Issuer Capped Index captures a selection of bonds from the largest MDBs within the G7 group of countries from the following issuers:

International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC) and International Development Association (IDA), Inter-American Development Bank, Asian Development Bank, European Bank for Reconstruction & Development, and the African Development Bank.

Key points:

Sovereign-rated impact lending: Multilateral Development Banks provide loans to developing countries at competitive rates, and are backed by member governments which create a quasi AAA-rated pool of impact-investible bonds.

Yield enhanced: Assuming no major credit events, MDB bonds offer a 0.14% yield enhancement over comparable US Treasuries (historical range 0.1% – 0.45% with no history of MDB default).

Highly liquid alternative to US Treasuries: MDB bonds offer credit risk sensitive investors access into one of the most liquid bond markets.

25% issuer capped with 100 individual bonds ranging from 0.15% to 2.34% of the index.

UBS Asset Management remains at the forefront of sustainable and impact investing innovation. By offering an impact alternative to US Treasuries, we further empower investors to generate superior returns whilst facilitating global change.


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