CME Group Plans Corporate Bond Index Futures Launch in 2024

CME Group announced it has received regulatory approval to list futures tracking Bloomberg indexes for U.S. investment grade and high-yield corporate debt starting 2024.

Key Insights

  • CME Group to launch new futures tracking U.S. corporate bond indexes in summer 2024
  • Contracts will be based on Bloomberg benchmarks covering investment grade and high yield debt
  • Aims to help investors manage growing credit exposure and risk as corporate debt issuance climbs

CHICAGO (MarketsXplora) – CME Group announced on Monday it will list new futures contracts tracking U.S. investment grade and high yield corporate bond indexes this summer, expanding its vast interest rate derivatives portfolio.

The futures will be based on Bloomberg’s benchmarks for liquid corporate debt and high-yield bonds, pending regulator approval, CME said in a statement.

“As corporate debt issuance continues to increase across sectors, market participants are looking for tools to help them navigate growing credit exposure,” said CME Global Head of Rates and OTC Products Agha Mirza.

The new contracts aim to allow traders to hedge credit risks and tap investment opportunities more easily in the ballooning corporate debt market, with the efficiency of CME’s clearing, settlement and risk management.

The Bloomberg U.S. Corporate Index covers dollar-denominated debt from America’s biggest companies across industry sectors. The high-yield index tracks a more targeted range of liquid junk bonds.

CME said its corporate bond futures would be listed on its widely-used Globex platform and clear via ClearPort, with automatic offsetting margins against CME’s other interest rate, equity index and FX contracts.

That allows clients trading a mix of products to achieve capital efficiencies from portfolio margining through CME’s clearing house.

Major corporations have increasingly turned to debt capital markets as borrowing costs remain relatively attractive despite Federal Reserve interest rate hikes over the past year.

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