Following last month’s launch of Bloomberg Total Return Swaps (BTRS), Bloomberg has executed the first standardised Total Return Swap transaction on the Bloomberg Barclays Indices.
Standardised BTRS provide exposure to the widely used Bloomberg Barclays fixed income indices including the US & Global Aggregates, US Corporate (IG) and US High Yield Indices as a tool for clients operating in the credit space who are subject to margin, risk and post-trade capital requirements.
“As financial institutions are forced to reduce the amount of risk and large bond positions they carry, a number of our clients have expressed strong interest in BTRS as an easy-to-transact means of alternative, synthetic exposure to the credit markets,” says Phil Cenatiempo (pictued), Head of Bloomberg Global Markets. “This exposure carries a lower risk of divergence from the underlying cash instruments at minimal capital expense for both the buy side and the sell side.”
“BTRS opens these market-leading fixed income benchmarks to a broader set of participants, including sell-side institutions that can use the instrument to hedge existing portfolios, better manage their risk allocation, or put new money to work,” adds Cenatiempo. “BTRS’ interoperability with Bloomberg’s fixed income valuation, risk and portfolio analytics tools creates a high level of efficiency in the workflow.”
UK-based banking and financial services company Barclays provided sell-side execution on the first BTRS transaction.
“BTRS represents a significant stride towards standardised swap agreements around benchmark indices as investors seek cost-efficient trading methods in specific credit markets with limited liquidity,” says Umang Bhatia, Head of Fixed Income Index Derivative Trading, TRS & Bond Forwards, Barclays. “As a leading market-maker in Bloomberg Barclays Index swaps, we look forward to providing access and liquidity in BTRS to customers.”
