International Corporate Bonds: A New Way To Play Developed Markets

With yields on U.S. treasuries looking paltry and many sovereign nations on shaky ground, interest in international corporate bonds is picking up. Despite the growing problems in the Euro zone, there are plenty of great companies within the region that are looking to raise capital. Corporate bonds from these countries might be less volatile and add to an investors overall yield. To satiate investor appetite for these assets, two new exchange traded funds have launched in the sector.

The SPDR Barclays Capital Intl Corp Bond IBND focuses on investment-grade corporate bonds and gives exposure to the Euro, Aussie, Loonie, Kiwi, Pound, Yen, Swiss Franc, Swedish Krona, and the Danish and Norwegian Krone. The fund does include U.S. company bonds that are payable in other currencies. The proposed yield on the fund is 3.05 percent with an average maturity of 5.3 years.

The PowerShares International Corporate PICB follows a similar structure with the added exclusion of U.S. companies and uses a sampling strategy with its index. The fund has distribution yield of 3.35 percent and holds 26 different bonds.