Total return swaps on iBoxx touted as alternative to corporate bond index ETFs

Exchange-traded funds that give exposure to corporate bond indexes could face competition from total return swaps on the indexes, say market participants

Total return swaps based on corporate bond indexes could compete with exchange-traded funds (ETFs) that track the indexes, according to industry participants. The size of the market for total return swaps on these indexes is estimated to be roughly $500 million a week across Europe and the US, says Denis Gardrat, head of credit derivatives structuring for Europe, the Middle East and Africa at BNP Paribas in London.

The corporate credit ETF market is huge in comparison. In October 2012, corporate