The new S&P series could very well prove to add another option for individual investors.

With investors fleeing to the security of Treasury bonds, Standard & Poor’s indexing services unit has been busy lately expanding its benchmarks focusing on that part of fixed income.

On Monday, S&P launched the S&P/Citigroup International Treasury Bond Index Series. It follows introductions of the S&P U.S. Commercial Paper Index and the S&P/LSTA U.S. Leveraged Loan 100 Index.

The new S&P series could very well prove to add another option for individual investors. Currently, the only way exchange-traded funds investors can access foreign Treasuries is through the SPDR Lehman International Treasury Bond Fund (AMEX: BWX). A pair of ETFs focused on developing countries are also out, the iShares JPMorgan USD Emerg Markets Bond Index (NYSEArca: EMB) and the PowerShares Emerging Markets Debt Portfolio (NYSE: PSY).

The new S&P index series will focus on government issues from developed markets outside of the U.S. It determines which are developed and which aren’t using classifications by the Bank for International Settlements, according to S&P.

“Treasury bonds issued by sovereign nations excluding the United States are an asset class that is often overlooked by investors. They have returns with low correlations with U.S. stocks and bonds as well as international stocks,” said James Rieger, an S&P vice president, in a statement.

The new series consists of two benchmarks. One is the S&P/Citigroup International Treasury Bond Index Ex-US, which includes bonds with a maturity of greater than one year. The other is the S&P/Citigroup International Treasury Bond Index Ex-US 1-3 Year, which includes bonds with a maturity of between one and three years. Both indexes will be rebalanced at the end of each month. On a backtested basis, the yields of the indexes have generally been between 2% and 4% since April 2001, says S&P’s research staff.

They also point out that Treasury bonds issued by sovereign nations outside of the United States continue to grow in importance. S&P says that the market at the end of last year had more than $9.5 trillion in outstanding bonds. Bonds from the developed markets represented the majority of the international Treasury bond market (through September) with the remaining 7% representing emerging market treasury bonds.

The top three sovereign issuers represented in the new international Treasury index series entering October were: Japan (24.95%); Germany (9.28%) and Italy (8.74%).

The benchmarks don’t have a set number of constituents, but are based on how many issues are eligible at each rebalancing. No single country can have a weight of greater than 24.95%, says S&P’s indexing services group.

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