loan credit default swap index
{{Short description|Tradeable finance index}}
The loan credit default swap index (LCDX) is a loan-only credit default swap index created by CDS Index Company (CDSIndexCo).{{cite news|url=https://www.forbes.com/2007/08/06/croesus-chronicles-indexes-oped-cz_rl_0807croesus.html|title=Profiting From The Meltdown|work=Forbes|date=8 August 2007|quote="Some top banks are quietly indexing credit, avoiding the credit bubble and raking in big bucks."|first=Robert|last=Lenzner}}
The LCDX index is a tradeable index with 100 equally weighted underlying single-name loan-only credit default swaps (LCDS).{{Cite web |title=Assessing the Role of Credit History When Applying for a Fast Loan |url=https://www.my-quickloan.co.uk/credit-history-when-applying-for-a-fast-loan/ |access-date=2023-08-07 |language=en}}
History
16 major financial institutions, JPMorgan, Goldman Sachs, Deutsche Bank, Barclays Capital, Bank of America, BNP Paribas, Citigroup, Credit Suisse, Lehman Brothers, Merrill Lynch, RBS Greenwich, UBS and Wachovia, owned the private company called the CDS Index Company (CDS IndexCo), that developed the ABX index on 17 January 2006.{{Cite web |last=Casey |first=Jerome |date=2023-03-15 |title=Improving Credit Score With a Credit Builder Loan |url=https://oxfordwisefinance.com/blog/improve-your-credit-score-with-a-credit-builder-loan/ |access-date=2023-03-15 |website=Oxford Wise Finance |language=en-US}}
Markit Group Limited marketed the ABX index and by 2007 had acquired (CDS IndexCo). On 17 The ABX index was a credit default swap of asset-backed mortgages of 30 of the most liquid mortgage-backed bonds. Hedge funds began shorting that ABX index in early 2006 at par. The Deutsche Bank, alone, reportedly made $250 million.{{harv|Lenzner|2007}}
Recognition
Forbes journalist described the creation of the index as just-in-time financial engineering. The LCDX provided protection for banks and hedge fund clients from the overly leveraged loan market.{{harv|Lenzner|2007}}
Stephen Waugh, a vice president at Deutsche Bank, announced the launch of Markit's first tranched "long-awaited" and "highly anticipated" loan credit default swap index (LCDX). Citigroup claimed it had been quoted on the market since the summer of 2007.{{harv|Stein|2007}}{{cite web|url=http://www.highbeam.com/doc/1G1-169820376.html|archive-url=https://web.archive.org/web/20150924144331/http://www.highbeam.com/doc/1G1-169820376.html|url-status=dead|archive-date=24 September 2015|publisher=|title=Tranched LCDX Hits the Market |series=Asset Securitization Report |date=15 October 2007 | last=Stein|first=Gabrielle }}
See also
References
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External links
- [https://web.archive.org/web/20080104024553/http://www.markit.com/information/products/lcdx.html Markit LCDX Indices]
Category:Derivatives (finance)
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