Dow Jones Takes Over TRAC-X High Yield Indexes

December 03, 2003

Dow Jones Indexes inked a deal with Morgan Stanley and JPMorgan to take over the TRAC-X North America High Yield Index series.

New York- December 3, 2003.  Dow Jones Indexes inked a deal with Morgan Stanley and JPMorgan to take over the TRAC-X North America High Yield Index series.  By the first quarter of 2004, Dow Jones Indexes will take over responsibility for the maintenance, calculation and distribution of index values and index data.

'As part of the agreement, we will be putting together regional Advisory Committees in the U.S., Europe and Asia, which will comprise a broad base of credit derivatives market makers," said Lars Hamich, executive director of global business development at Dow Jones Indexes. "These committees will ensure that the Dow Jones TRAC-X Indexes remain an entirely neutral product created solely for the benefit of the credit derivatives market overall.'

The Advisory Committees will advise Dow Jones Indexes on methodology, rebalancing and other related topics. Dow Jones Indexes will remain the ultimate decision maker.

'We have already received tremendous interest in issuing structured products, exchange-traded derivatives and ETFs based on the Dow Jones TRAC-X Indexes and expect to issue the first licenses soon," said Hamich.

After consulting the 12 licensed market makers the following 14 names will be added to the underlying basket of the Dow Jones TRAC-X North America High Yield Index Series 2 Index that consists of the 100 most liquid North American high yield credit derivative swaps: Collins & Aikman Senior; Graphic Packaging International Inc.; Nalco Company; The Premcor Refining Group Inc.; DIRECTV Holdings LLC; DYNEGY Holdings Inc.; Williams Companies; Houghton Mifflin Company; Echostar DBS Corporation; AMR Corp.; United Rentals NA Inc. Sub.; TRIAD Hospitals Inc.; Case New Holland; RJ Reynolds Tobacco HLDG.

The following 14 names have been deleted from the Dow Jones TRAC-X North America High Yield Index: Collins & Aikman Sub; Ball Corp.; Hercules Inc.; Nuevo Energy Company; Lear Corporation; Westar Energy Company; Mirant Americas Generation LLC; Alliant Techsystems; Echostar Communications Corporation; Northwest Airlines; United Rentals NA Inc. Senior; Community Health Systems, Inc.; The Shaw Group Inc.; The GAP Inc.

The new composition of the Dow Jones TRAC-X North America High Yield Series 2 Index is the result of input from participating dealers and clients as to portfolio construction, reference entities and reference obligations. The standard notes of the participating market makers that are used to calculate the index values will be launched on December 3. The Dow Jones TRAC-X North America High Yield Indexes were initially launched on November 2001.

Since the launch of TRAC-X on April 1, 2003, over $150 billion linked to the Dow Jones TRAC-X Indexes has traded and 33 indexes and various off-shoot products such as options and tranches have previously been added to this leading CDS index family. The major regional Dow Jones TRAC-X Indexes that have launched to date include: Dow Jones TRAC-X Europe, Dow Jones TRAC-X NA (North America), Dow Jones TRAC-X NA High Yield, Dow Jones TRAC-X Japan, Dow Jones TRAC-X Australia, Dow Jones TRAC-X EM (Emerging Markets) and Dow Jones TRAC-X Asia.

Currently, 12 institutions are licensed market makers in the suite of Dow Jones TRAC-X products: Barclays Capital, Bear Stearns, BNP, Credit Suisse First Boston, HSBC, JP Morgan, KBC, Lehman Brothers, Merrill Lynch, Morgan Stanley, Nomura, UBS.


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