Solactive Launches Subordinated Bank Bond Index for Betashares in Australia

Solactive has launched the Solactive Australian Major Bank Subordinated Index in partnership with Betashares, a leading exchange traded fund (ETF) provider in Australia. To be eligible for inclusion in the index, bonds must have amounts outstanding of at least $500 million and a remaining maximum term to maturity of 10 years.

The Solactive Australian Major Bank Subordinated Index tracks the performance of a portfolio of Basel III Tier 2 subordinated floating rate bonds issued by Australia’s four largest banks – Australia and New Zealand Banking Group Limited (ANZ), Commonwealth Bank of Australia, National Australia Bank Limited (NAB), and Westpac Banking Corporation. The Australian major banks remain the foundational pillars of
the banking system, and Australian banks are generally considered some of the best capitalised major financial institutions in the world.

The ETF began trading on the ASX on 8 May 2024 with the ticker symbol “BSUB”. 

“We are very pleased to partner with Betashares on this new benchmark tracking the subordinated debt of Australia’s major banks,”  said Timo Pfeiffer, Chief Markets Officer at Solactive. “With a major bank net issuance of $9bn last year in the Australian market, subordinated bonds have again attracted investor’s attention. Sticky inflation, in combination with a strong global economy despite rapid rate rises, took the markets by surprise and can lead to further increases of Tier 2 capital issuance at attractive yields.”

“We’re excited to launch BSUB as we continue to broaden the range of investment options available to Australian investors and their financial advisers. BSUB offers investors attractive monthly income, a high degree of capital stability, along with potential portfolio diversification benefits due to Tier 2 floating rate bonds historically exhibiting a low correlation to equities,” said Betashares CEO, Alex Vynokur.