Markit Group Ltd. has launched a pricing service for loan credit default swaps (LCDS). The service provides same day spreads for over 300 reference entities and tiers traded in the European and North American markets. The new service draws prices from contributing dealers to create a composite that is made available at 4:00 pm daily in London and New York.
Markit said that sell-side firms using the service will see spreads on a particular reference entity when there is a minimum of three dealers making markets in that name while buyside firms will be able to access even thinly quoted entities. Markit will also offer valuations on LCDS. The new service rounds off Markit's CDS and syndicated loan pricing services -- the group launched its iTraxx European LCDS index, LevX, in October this year, which has helped drive liquidity.
"We expect to see enormous growth in the trading of single-name LCDS and LevX over the coming year, with interest in the product coming from a very broad cross-section of institutional investors," Matthew Smith, director and head of European loan trading at Deutsche Bank, said. "The introduction of Markit's LCDS pricing service will bring transparency to this new market which will in turn encourage greater liquidity and growth."