Market Vectors launches North America defaulted, distressed bond index

By Jennifer Chiou

New York, May 21 - Market Vectors Index Solutions GmbH introduced the Market Vectors Altman North America Defaulted & Distressed Bond index, which tracks the performance of the U.S. and Canada defaulted and distressed bond market with bonds denominated in U.S. dollars, according to a press release.

The company said that the index was developed with professor Edward Altman of NYU Stern School of Business and Brenda Kuehne, a distressed debt research associate at the NYU Salomon Center.

"A combination of distressed high-yield and defaulted bonds has outperformed most asset classes over long and medium terms from an absolute and risk-adjusted basis," Altman said in the release.

"These bonds also tend to be negatively correlated to government and highly rated investment-grade debt, and correlate even less to equity securities than traditional high-yield bonds and bank loans."

The release noted that distressed bonds are defined as corporate bonds whose yield spread exceeds 1,000 basis points over comparable duration Treasury bonds.

Market Vectors said that the index targets a weight between 50% and 80% in defaulted bonds and the remaining weight in distressed bonds. The weighting of defaulted and distressed bonds will be based on the Altman-Kuehne/NYU-Salomon Center Dollar-Based 12-months Moving Average Default rate.

The index is rebalanced monthly, while the target allocation of the index is reviewed quarterly.

The Market Vectors Altman North America Defaulted Bond index and the Market Vectors Altman North America Distressed Bond index are subindexes.

Market Vectors Index Solutions is a wholly owned subsidiary of Van Eck Associates Corp.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.