The National Association of Securities Dealers and Bloomberg are teaming up to jointly launch two corporate bond indices – the NASD-Bloomberg Active Investment Grade US Corporate Bond Index and the NASD-Bloomberg Active High Yield US Corporate Bond Index.

The firms say these are the first and only corporate bond indices generated solely from the actual transaction prices of actively traded bonds – not on quotes or estimated prices. That transaction data is derived from NASD’s TRACE (Trade Reporting and Compliance Engine), which collects and publicly disseminates transaction data on 100% of over-the-counter activity in the entire universe of more than 30,000 corporate bonds.

Each index is calculated the evening of every trading day, reflecting transactions through 5:15 p.m. ET. Each index provides index values for Total Return, Price, Yield and Volume, with changes from the previous close. Additional supporting information includes each index’s 10 most active bonds, the top 10 leading movers and the top 10 lagging movers. All of the index data will be posted after 5:30 p.m. ET and accessible free of charge at www.nasdbondinfo.com and through www.nasd.com.

The indices will also be available to users of the Bloomberg Professional service. In addition, in coming days, Bloomberg News will be distributing two daily TRACE-derived corporate bond market reports on its financial wire service to more than 500 news outlets. One will report the day’s values for both corporate bond indices. The second will be a TRACE Daily Market Report, which will include total issues traded, advancers, decliners, unchanged issues, 52-week highs and lows, and dollar volume for the entire corporate bond market and individually for each of the market’s three segments – investment grade, high yield and convertible bonds.

“The launch of these bond indices fulfills a major part of NASD’s mission to get solid, reliable, neutral information to retail investors,” said Doug Shulman, NASD’s president of Markets, Services and Information. “Unlike other bond indices that often include bonds that may rarely trade, the NASD-Bloomberg indices reflect actual transactions throughout the most actively traded portion of the market – and 65% of that activity is carried out at the retail level.”

Shulman noted that the corporate bond market, once thought to be solely the domain of sophisticated institutional investors, is increasingly important to retail investors – especially the baby boomers who are moving more and more of their assets from equity investments to fixed income investments as they get closer to retirement.

“There is no doubt that the corporate bond market will only grow in size and in importance to individual investors – but it’s a market that has been largely a mystery to them,” Shulman said.

“NASD studies have shown that only 40% of investors understand that bond prices fall as interest rates rise. Another 34% either thought there is no fee for buying or selling a bond, or they didn’t know whether they were paying a fee for bond transactions,” he added. “NASD believes there is no better way to build investor trust than for markets to operate in total daylight, and that the better investors understand how a particular market works, the more likely they are to participate in it. And that’s why these NASD-Bloomberg indices are so important. They’re the first fixed income indices geared toward the retail investor as a broad benchmark to gauge market performance.”

TRACE, which is owned and operated by NASD, was introduced in July 2002 in an effort to increase price transparency in the U.S. corporate bond market. It is the only regulated intra-day price dissemination service in the over-the-counter corporate bond market.


News release
News release
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