What is 'ABX index'

A financial benchmark that measures the overall value of mortgages made to borrowers with subprime or weak credit. The ABX index uses credit default swap contracts to come up with an overall value and is made up of 20 bonds that is comprised of groups of subprime mortgages. Using this index, financial institutions are able to determine if the market for these securities are improving or worsening. Also referred to as Asset-Backed Securities Index.

Explaining 'ABX index'

For example, if the ADX Index increases, this means there is less risk with subprime mortgages and vice versa. It was created by Markit and is useful for investors interested in subprime mortgages. Subprime mortgages being mortgages given to customers with faulty or weak credit.

Further Reading

Knowledge production in financial markets: credit default swaps, the ABX and the subprime crisis
www.tandfonline.com [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

Causes of the financial crisis
www.tandfonline.com [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

The pricing of subprime mortgage risk in good times and bad: evidence from the ABX. HE indices
www.tandfonline.com [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

The bear's lair: Index credit default swaps and the subprime mortgage crisis
academic.oup.com [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

Assessing the effectiveness of the Paulson “teaser freezer” plan: Evidence from the ABX index
www.sciencedirect.com [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

The fractal market hypothesis: applications to financial forecasting
arrow.dit.ie [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

The economics of structured finance
www.aeaweb.org [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

Information, liquidity, and the (ongoing) panic of 2007
pubs.aeaweb.org [PDF]
… During the first part of 2007, the ABX BBB and BBB−indexes continued their decline. Around the middle of 2007, however, the other ABX indexes began to decrease. By the end of 2007, the ABX AAA index was below 80 and the other indexes were all below 50 …

Q&A About ABX index