Tabula launches US and European investment grade credit default swaps ETF on Xetra
Tabula has issued a new ETF focussed on European investment grade credit default swaps on Xetra and Börse Frankfurt.
The Tabula Global IG Credit Curve Steepener UCITS ETF (EUR) Acc gives investors the opportunity to invest in credit default swaps with investment grade rating from Europe (iTraxx Index) and the USA (CDX IG Index). Both the iTraxx Europe and the CDX IG Index each contain 125 credit default swaps (CDS). In order to benefit from a steeper credit curve, a long position is opened in the most recently issued five-year CDS and a short position in the most recently issued ten-year CDS. In order to maintain the current CDSs at all times, the indices are reviewed on a monthly basis.
Credit default swaps are instruments through which banks in particular pass on the default risk of their borrowers to third parties, so-called guarantors. The guarantors receive a premium for this. In return, they commit to make a compensation payment to the bank if the borrower is in arrears with his payments or defaults.