Markit rolls out MCDX, a new municipal bond credit derivative index

By Laura Lutz

Des Moines, May 1 - Markit Group Ltd. announced that it plans to launch the Markit MCDX, an index of 50 municipal bond credit default swaps, on Tuesday.

The index is intended to serve as a liquid and transparent tool for investors to gain exposure to municipal bonds.

It will consist of 50 equally weighted, investment-grade credit default swaps, excluding tobacco and health-care issuers.

The index will have coupon payment dates of March 20, June 20, Sept. 20 and Dec. 20 and roll dates of April 3 and Oct. 3.

To ensure liquidity, the index market makers at launch will include Citi, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS. Markit said this group of dealers has a proven track record of success in municipal bond and credit derivative markets.

Markit provides independent data portfolio valuations and over-the-counter derivatives trade processing to the global financial markets.

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