Loan Derivatives Index Soars

April 25 (Bloomberg) -- A gauge of investor confidence in the U.S. leveraged-loan market is headed for its biggest monthly increase since being created last year as banks find ways to sell loans they have been stuck with the past 10 months.
The LCDX index is rallying as Citigroup Inc., Deutsche Bank AG and the rest of Wall Street whittle down their leveraged-loan liabilities to about $91 billion from a peak of $237 billion in August, according to Bank of America Corp. strategists led by Jeffrey Rosenberg in New York.
The LCDX Series 9, a credit-default swap index tied to the loans of 100 companies in the U.S. and Canada, has climbed 3.5 percentage points to 96.9, according to Goldman Sachs Group Inc. A newer version LCDX 10, used to hedge against losses or to speculate on the ability of companies to repay their debt, is up 2.1 percentage points to 99.1 since it started trading April 8.
``It's been quite a euphoric run for the market,'' said Alan Alsheimer, who trades the LCDX contracts at Goldman Sachs in New York.