Tapping into liquidity in the high-yield bond market: derivatives and lending markets

The iBoxx USD Liquid High Yield Index has served as the leading benchmark for the high-yield market since its debut in 2006. Designed to track the most liquid instruments in this market, the index supports a broad trading ecosystem via exchange-traded funds and derivatives. In part one of this two-part white paper, we highlighted the growth of the high-yield bond market and the index construction attributes that contribute to the iBoxx USD Liquid High Yield Index liquidity ecosystem. We measured the effectiveness of the index methodology in current markets through bond liquidity analysis. In part two of this paper, we continue to analyse liquidity in different forms by exploring the fund, derivatives and securities lending markets that propagate liquidity.