how do downgrades effect ABX index?
Does anyone have any insights as to how a security downgrade would impact an index like the ABX? Normally the index tracks how well securities of particular ratings do. But what if one bond moves classes altogther due to a ratings change? Wouldn't that actually make the index look better?
An AA security that becomes BBB would no longer be tracked as in the AA group. Removing a poorly performing AA security from the AA group should, in theory, be positive for the index of remaining AA shares.
Am I missing something here?
An AA security that becomes BBB would no longer be tracked as in the AA group. Removing a poorly performing AA security from the AA group should, in theory, be positive for the index of remaining AA shares.
Am I missing something here?
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