The iTraxx Crossover index will be expanded to 45 from 40 names when the European credit derivative indices roll March 20. “This will diversify the index and mean less risk per name,” said David Mark, ceo at International Index Company which operates the indices.
The extension was decided after dealers voiced support for the move in a poll by ICC two weeks ago. Roughly 20 dealers were consulted. One strategist predicted the new exposures could be companies recently connected to LBO rumors or recent fallen angels, including Danish telecom TDC and Spain’s Wind Telecomunicazioni.
Names in the Crossover must be rated no higher than BBB minus with a negative outlook. A preliminary list of the five new names will be drawn up March 10, followed by a more definitive list March 17.