Index provider Standard & Poor's has launched the S&P/Citigroup International Treasury Bond Index Series in the latest expansion of its fixed-income index range, following the introduction last month of the S&P US Commercial Paper Index and the S&P/LSTA U.S. Leveraged Loan 100 Index.

The market for treasury bonds issued by sovereign nations (excluding the US) amounted to more than USD9.5trn in outstanding bonds at the end of last year. Bonds from developed markets represented 93 per cent of the international treasury bond market at the end of September; the remaining 7 per cent consisting of emerging market treasury bonds have a different risk profile.

The International Treasury Bond Index Series is designed to provide a benchmark for developed market - as defined by the Bank for International Settlements - treasury bonds excluding the US.

The series consists of two indices, the S&P/Citigroup International Treasury Bond Index Ex-US, which includes bonds with a maturity of greater than one year, and the S&P/Citigroup International Treasury Bond Index Ex-US 1-3 Year, which includes bonds with a maturity of between one and three years. The indices are rebalanced at the end of each month. On a back-tested basis, the yields of the indices have generally been between 2 and 4 per cent since April 2001.

'Treasury bonds issued by sovereign nations excluding the US are an asset class that is often overlooked by investors,' says James Rieger, a vice-president with Standard & Poor's Index Services.

'They have returns with low correlations with US stocks and bonds as well as international stocks. The new indices are designed to provide investors with more transparency about the performance of this asset class. Risk factors include default risk, liquidity risk, interest rate risk and currency risk.'

The top three sovereign issuers represented in the index series, as of September 30, are Japan (24.95 per cent), Germany (9.28 per cent) and Italy (8.74 per cent). The indices do not have a set number of constituents, but are based on how many issues are eligible at each rebalancing. No single country can have a weight greater than 24.95 per cent.

Standard & Poor's Index Services maintains a wide range of investible and benchmark indices including the S&P 500, an index with USD1.5trn invested and USD4.85trn in benchmarked investments, and the S&P Global 1200, a composite index comprised of seven regional and country headline indices.