What Are CMBX Indices?

CMBX Indices are a group of financial indexes that track the commercial mortgage-backed securities (CMBS) market. These indexes represent 25 tranches (French word meaning “slice”) of CMBS, each with a different credit rating. Because mortgage-backed securities are illiquid and non-standardized in the 澳洲幸运5官方开奖结果体彩网:over-the-counter (OTC) market, they often lac𝔍k the transparency and regulation of list𒊎ed securities. These indexes help provide liquidity and transparency.

These indexes enable investors to gauge the market and take long or short positions via 澳洲幸运5官方开奖结果体彩网:credit default swaps, which put specific interest rate sꦅpreads on each risk class. The pricing is based on the spreads themselves rather than on a pricing mechanism.

Understanding CMBX Indexes

🥃Commercial mortgage-backed securities are a pool of loans typically contained within a trust, and they can be highly diversified in terms, property types, and amounts. The underlying loans that are securitized into CMB🔯S include loans for properties such as apartment buildings and complexes, factories, hotels, office buildings, office parks, and shopping malls, often within the same trust.

There are five separate CMBX indexes for ratings ranging from "AAA" to "BBB-" based on a basket of 25 CDSs, which reference CMBS securities.

The CMBX indexes are reconstituted every six months to bring in new securities and thereby continuously refle🔯ct the current health of the CMBS market. Daily trading i✤nvolves cash settlements between the two parties to any transaction.

This "pay as you go" settlement process considers three events in the underlying securities as "credit events": principal 澳洲幸运5官方开奖结果体彩网:writedowns, principal shortfalls (failures to pay on an underlying mortgage), and interest short෴falls (when current cash flows pay less than the CMBX coup♏on).

Special Considerations

The introduction of indexes like the CMBX has led to massive growth in the 澳洲幸运5官方开奖结果体彩网:structured finance market, which includes credit default swaps, commercial mortgage-backed securities, 澳洲幸运5官方开奖结果体彩网:collateralized debt obligations, and other collateralized securities.

Trading in the CMBX tranches is done over the counter, and liquidity is provided by a syndicate of large investmen🌟t banks. While the average investor cannot participate in the CMBX indexes directly, they can view current spreads for a given risk class to assess how the market is digesting current market conditions, making it a potentially valuable research tool.

The CMBX indexes are issued by the CDS Index Company and administered by . For these indexes to work, they must have sufficient 澳洲幸运5官方开奖结果体彩网:liquidity. Therefore, the issuer has commitments from the largest dealers (large investment banks) to provide liquidity in the m✨arket.

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