Markit, a financial information services company, will release a family of sovereign credit default swap (CDS) indices that will track investor perceptions of the credit risk of a range of countries around the world.
The Markit iTraxx SovX indices are scheduled to launch in July. The indices will be calculated daily on a theoretical basis.
These indices will serve as transparent and standardized tools to monitor the sovereign CDS market while gaining regional and global access to the asset class.
According to Executive Vice President Niall Cameron, the indices are designed to, provide investors with greater insight into the credit risk of a group of countries and an ability to gain exposure to the sovereign CDS asset class.
These new indices come with the emergence of an actively traded CDS market in industrialized nations. The new active market resulted from the current financial crisis as well as growing investor concerns on the solvency of developed economies, and not just on the previous limitations of trading sovereign CDS to emerging markets.
Initially, the family of indices will be made up of the following Market iTraxx SovX divisions: G7, tracking most industrialized countries; Global Liquid IG, tracking countries in Asia Pacific, Eastern Europe, Latin America, Middle East and Africa, North America and Western Europe; Western Europe, tracking 15 countries in western Europe; and CEEMEA, tracking 15 countries in the CEEMEA region.
