CDX indices contain North American and Emerging Market companies and are administered by CDS Index Company (CDSIndexCo) and marketed by Markit Group Limited, and iTraxx indices contain companies from the rest of the world and are managed by the International Index Company (IIC), also owned by Markit.
What does iTraxx measure?
Key Takeaways. iTraxx is a collection of indexes for the credit default swap market in Europe, Australia, and Asia. 1. These indexes allow market makers and active participants in the swaps market to take the other side of trades for a short period and provide liquidity in these markets.
What is EM CDX?
The Markit CDX Emerging Markets Index (“CDX EM” or the “Index”) is composed of fifteen (15) sovereign reference entities that trade in the CDS market. Administrator. All CDX Indices are owned, managed, compiled and published by Markit (the “Administrator”).
What is iTraxx CD?
iTraxx indices are a family of European, Asian and emerging market tradable credit default swap indices. iTraxx indices allow investors to express their bullish or bearish sentiments on credit as an asset class and help portfolio managers actively manage their credit exposures.
How is CDX traded?
The CDX is completely standardized and exchange-traded, unlike single CDSs, which trade over the counter (OTC). As such, the CDX index has a high level of liquidity and transparency. CDX indexes also may trade at smaller spreads than CDSs.
What is xover credit?
A situation in which a bond is speculative grade but very close to investment grade or vice versa. It often refers to a split rating in which one credit rating agency gives the bond an investment grade rating and another gives it a junk rating.
How do CDX trades work?
The CDX helps to hedge risk by protecting bond investors against default, and traders use CDX indexes to speculate about potential changes in issuers’ credit quality. Every six months, the underlying securities of the CDX are examined and, if appropriate, replaced with new securities.
How does CDX IG work?
The CDX index rolls over every six months, and its 125 names enter and leave the index as appropriate. For example, if one of the names is upgraded from below investment grade to investment grade, it will move from the high-yield index to the investment-grade index when the rebalance occurs.
