Definition of ABX index:
The ABX Index is an index created by Markit (an intelligence networking company) that represents 20 subprime residential mortgage-backed securities (RMBS). The Index is used as a financial benchmark measuring the overall value and performance of the subprime residential mortgage market.
The ABX Index utilizes credit default swaps in its construction to provide an index that is representative of the subprime RMBS market. Values have ranged from 50 to approximately 100, with daily pricing only available for market subscribers. The Index may also be known as the Markit ABX Home Equity Index, the ABX.HE Index or the asset-backed securities index.
Used to derive the value of the subprime mortgage investment market. The index uses a series of credit default swap contracts to determine the overall value of mortgages made to borrowers with weak credit. It is made up of four series, each with 20 bonds that consist of groups of subprime mortgages. Using this index, which is an accumulation of mortgages made at different times, investing institutions are able to determine whether the market for these securities is worsening or improving. They are also able to use the index to hedge against losses on subprime mortgages they may hold. Also called Asset-Backed Securities Index.
How to use ABX index in a sentence?
- The ABX Index is used as a barometer for market health within the subprime residential real-estate sector.
- The Index is updated twice per year.
- Although demonstrative of its collection of subprime mortgage-backed securities, the Index should not be the only indicator for overall market conditions.
Meaning of ABX index & ABX index Definition