FTSE Russell Canada announced on Tuesday that it has launched a standalone index that will allow Canadian investors to track the issuance and performance of non-viable contingent capital (NVCC) securities.
The FTSE TMX Canada NVCC bond index tracks this new type of security, which was introduced in Canada just two years ago as an instrument to help Canadian banks strengthen their capital ratios and meet global regulatory requirements set by the Basel Committee on Banking Supervision.
“This NVCC area is material and important enough to Canadian investors to warrant an index to specifically track and measure it,” says Marina Mets, director at FTSE Russell Canada, in a statement. “We believe our new index will enable our clients to better track and understand the nuances of what’s clearly an evolving asset class in Canada.”
The index had 14 issues from five issuers and a market capitalization of approximately $15.6 billion as of Nov. 30, the announcement states.
NVCC securities are a hybrid type of security with elements of both equities and debt and include a mechanism that allows the security to be converted into common stock if the bank is facing severe financial difficulties, according to a description on the Ontario Securities Commission’s website.