Dow Jones iTraxx CDS indexes launched for Asia, Australia and Japan

A new series of Asian credit default swaps (CDS) indexes have been launched today in Asia, Australia and Japan, combining the dealers behind the Dow Jones Trac-x, iBoxx and CJ 50 indexes under a single index umbrella.

The merged Dow Jones iTraxx Asian CDS index series is aimed at increasing liquidity in the region’s credit default swaps indexes. International Index Company, formerly known as iBoxx Limited, will manage the indexes.

The Dow Jones iTraxx Asia ex-Japan index comprises 30 equally weighted Asian names, chosen by a dealer poll based on traded volumes. The index also includes regional sub-indexes for South Korea, Greater China and the rest of Asia. The Dow Jones iTraxx Australia index comprises 25 most liquid names in that market, while the Dow Jones iTraxx CJ index comprises the 50 most liquid names in Japan, with a cap of 10 names for each sector. All six indexes will trade in an unfunded format with five-year maturities.

The indexes are partly based on the former Dow Jones Trac-x indexes, launched by JP Morgan Chase and Morgan Stanley last year, and the CJ 50, a Japanese CDS index launched by BNP Paribas. The iBoxx consortium, which included ABN Amro, Citigroup and Deutsche Bank, was planning to launch an Asian CDS index before the merger between the three groups was announced in April.

“Following on the heels of the successful launch of our European CDS indexes, the launch of the Dow Jones iTraxx Asian CDS indexes provides investors with a single, unified family of indexes which will become the benchmark for the rapidly growing credit markets in Asia,” says David Mark, chief executive of International Index Company.

“Like the European CDS indexes, the Asian indexes enjoy the participation of a large number of market makers, thus ensuring liquidity and transparency. These indexes will also help promote next-generation products which will give credit investors additional ways to express their individualized views in the credit markets,” he adds.

The market makers that participated in the poll to determine the constituents of the indexes and licensed to trade them are ABN Amro, Barclays Capital, Bear Stearns, BNP Paribas, Calyon, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Lehman Brothers, Merrill Lynch, Mitsubishi Securities, Morgan Stanley, NikkoCiti and UBS.