Markit Revamps European Loan Index

Thu, 20 Mar 2008

Markit have provided a boost for the high risk loan market with the completion of a revamped index of leveraged loan derivatives. The derivatives data provider has brought a new found flexibility to the index’s documentation, following a year of discussions as to whether it is possible to modernise the European market, which now boasts more similarities with the American system.

The high risk loan market has struggled to cope with the impact of the credit crisis, with exposure to the sub-prime loans estimated to be over £100 billion. There are 14 major banks who are committed to the European index, who have expressed their approval of the new index which they hope will attract additional investors .

The index is expected to double in size in terms of the number of names it contains, though credit default swaps will no longer be removed from the index when the debt underlying a contract is refinanced or repaid, but will instead be replaced in the index by their successors.
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