News

June 29, 2011

The new analytic product by IFC METROPOL – a bonds index of the electric energy industry companies

The investment and finance company METROPOL has developed a bonds index of the electric energy industry companies. The indicator reflects the dynamics of price, profitability and duration of bonds issued by the companies operating in the electric energy industry allowed for circulation at the Moscow inter-bank currency exchange.
The mission of the new analytical product is to emerge as an industry control index that would allow tracking the performance of managing assets and investment portfolios.
Generally already existing bonds indices are not industry-related and incorporate a large number of different types of bonds. “Such indicators must not be used as control indicators for an objective evaluation of investment management as they do not reflect a certain industrial sector’s specifics”, - believes Arthur Plaude, Managing director of IFC METROPOL’s debt instruments and derivatives department.

“Being a market maker at the electric energy industry bonds market, we always know precisely the real market situation and show it through our index. Having a clear industry orientation, the METROPOL index gives investors and anybody else interested a chance to see both the general trend and the short-term market fluctuations; it allows estimating the effectiveness of investing in a specific industry and building future projections”, - underscores Pyotr Kadysh, head of IFC METROPOL’s debt instruments and derivatives analytical directorate.
The new indicator is developed in accordance with the recommendations given by the CFA Institute and fully meets international standards for building stock indices complying with such crucial criteria as the possibility of replication with no active management, the possibility to estimate the value of bonds on a permanent basis and the opportunity to determine the weight of company’s bonds comprising such weight and so on.

The current composition of the Index (100%) includes the following companies and issues of bonds: FSK 7 series (34,9%), RusHydro 1 series (28,9%), Mosenergo 2 series (8,2%), OGK-5 1 series (9,2%), TGK-1 01 series (5,0%), MOESK 1 series (4,9%), OGK-6 1 series (2,9%), TGK-9 1 series (2,5%), TGK-6 1 series (2,0%), Lenenegro 2 series (1,7%), TGK-5 1 series (1,5%), TGK-2 1 series (0,8%), MRSK-South 2 series (0,5%).
The specific weight of the companies is calculated based on their market capitalization as of the beginning of March 2011 and it is used for a retrospective building of the indicator.
The index base revision interval is every six months.

The indicator is presented in four categories:
• aggregate income index;
• price index;
• yield index for payment (for put/call options);
• duration index.

The index incorporates several time intervals. Within each interval the composition of the indicator is rebalanced by inclusion of new issues of bonds.
In case the decrease of duration for calculating the baseline index is less than one year and a half, the indicator can be balanced by replacing its incoming bonds by new issues without changing the emitting company.

The index values are given at the Internet resources of the information agencies Bloomberg and Cbonds as well as on IFC METROPOL’s own site both in graphical and archived data register formats. http://ib.metropol.ru/equity_research/fixed_income/index/index.wbp

Company overview:
The investment and finance company METROPOL was founded in 1995. It conducts brokerage, renders services of facilitating transactions related to reorganization, buying and selling, crisis management of companies, procurement of debt and registered capital, assets realization as well as financial and corporate consulting. The company has extensive experience of public (IPO, SPO) and private security offering. The National Rating Agency has awarded IFC METROPOL the AAA individual reliability rating (which corresponds to the maximal reliability possible).

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