US/UK - Merrill Lynch has launched a new high yield issuer constrained index series.
The series is designed to diversify the benchmark indices used by high yield investors.
It parallels the firm's existing global, US and European high yield indices, but imposes an additional cap on the maximum holding of any one issuer. This cap is 2% for the global and US indices and 3% for Europe.
Phil Galdi, managing director of Merrill’s global index team said: The large influx of heavily debt-laden fallen angels has significantly altered the high yield landscape and triggered the need for new benchmarks.
Fallen angels are the debt of companies that were investment grade at the time of issue but have since been downgraded to below investment grade - BB or lower - by rating agencies; a type of junk bond.
A complete listing of the new indices and their associated cap-weighted counterparts can be found at www.mlx.ml.com.
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