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How LCDX Differs from CDX High Yield Credit Indices

Article Quant Q&A · Author: Preetam
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Summary

The document distinguishes LCDX and CDX High Yield by the credit exposure represented in each index. CDX High Yield tracks companies classified as higher risk under credit measures, while LCDX references loans. It notes that these loans are generally syndicated and supported by borrower assets, which helps explain the difference in underlying credit instruments.

The response does not explain how to value or trade the indices, give constituent or contract details, or answer the question about LCDS cancellability. It points readers toward the relevant product rules for further information. The brief explanation is therefore useful as a basic orientation, but it is incomplete and should not be treated as a full comparison of index mechanics or investor risks.

Key ideas

  • CDX High Yield provides credit exposure to companies considered higher risk under credit metrics.
  • LCDX references loans rather than the broader company credit exposure described for CDX High Yield.
  • The referenced loans are described as syndicated and asset-backed.
  • The response leaves LCDS cancellability unexplained and directs readers to product rules for details.

Tags

Fixed incomeDerivatives pricingRisk management
Full text
# What are the difference between LCDX vs CDXHY?


# What are the difference between LCDX vs CDXHY?












I would like to understand what the main differences between LCDX and CDXHY are.

Also, can anyone explain what the cancellable feature for LCDS, which is not there for CDS's, is and what it means for investors?

## Answer by M. Jeunesse (score 1)

https://quant.stackexchange.com/a/30438

Broadly speaking, CDX HY is a credit index on companies that are risky according to some credit metrics. Whereas LCDX is a credit index on loans. I remember that loans are syndicated and are backed by assets.

Documentation can be found on the Markit website.

http://www.markit.com/Documentation/Product/LCDX

http://www.markit.com/Documentation/Product/CDX

Look for the Rules document.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.