iTraxx

iTraxx is a family of credit default swap (CDS) indices designed to track the credit risk of a cross-section of reference entities in specific regions. First introduced in the early 2000s by Markit and participating banks, iTraxx has become a widely used benchmark and trading instrument in the credit derivatives market. The series provides standardized baskets across regions, including Europe (iTraxx Europe), Asia-Pacific (iTraxx Asia-Pacific), and Japan (iTraxx Japan). A separate iTraxx Crossover index covers lower-rated, non-investment-grade credits. Indices exist for different credit classes, most commonly investment-grade and high-yield or crossover.

Each index is constructed from a fixed basket of reference entities and associated five-year CDS contracts. The baskets are redesigned periodically to reflect market changes and maintain representativeness. The index value is calculated from the spreads of the constituent CDSs and is published by Markit and updated on trading platforms. The iTraxx series are widely used for hedging, price discovery, and as benchmarks for funds and banks. They provide liquidity and standardization in the credit derivatives market and have influenced regulation and market structure by enabling more transparent CDS trading.

Over time, the iTraxx family has expanded to address regional markets, including Europe, Asia-Pacific, and Japan, with sub-indices that target different risk profiles. The general approach is to facilitate efficient transfer of credit risk and provide a trackable measure of regional credit-market sentiment. The indices are commonly used by traders, banks, asset managers, and risk managers to assess and manage credit exposure across counterparties and sectors.