What Is Bond Buyer Index?
The Bond Buyer Index, often referred to as the Bond Buyer’s Municipal Bond Index or BB40, is a muni bond index printed thru The Bond Buyer, a daily finance newspaper that covers the municipal bond market and tracks 40 highly-rated, long-term municipal bonds.
The index is the benchmark for municipal bond index futures traded on the CBOT.
Key Takeaways
- The Bond Buyer Index is a daily index of municipal bond prices created in the course of the Chicago Board of Business and printed thru The Bond Buyer.
- The Bond Buyer Index, often referred to as the BB40 index, is in keeping with the prices of 40 simply in recent times issued and actively traded long-term municipal bonds.
- Buyers use the Bond Buyer Index to devise interest rate patterns inside the municipal market while consumers use it to industry municipal bond index futures and possible choices on the CBOT
- Other municipal bond indices exist at the side of the BB20 and BB11.
Understanding Bond Buyer Index
Buyers use the Bond Buyer Index to devise interest rate patterns inside the municipal market. Consumers use the daily Bond Buyer Index to industry municipal bond index futures and futures possible choices on the Chicago Board of Business (CBOT). The Bond Buyer Index was thus created in the course of the CBOT to be the basis for the Municipal Bond Index futures and possible choices contract. In addition to, investment advisers use the Bond Buyer’s Municipal Bond Index to pass judgement on and track changes in new issues of best rated municipal bonds.
The Bond Buyer Index, often referred to as the BB40 index, is in keeping with the prices of 40 simply in recent times issued and actively traded long-term municipal bonds. The 40 municipal bonds built-in inside the index comprises of ordinary prison accountability (GO) bonds and income issues rated A or upper with:
- a period of time portion of no less than $50 million ($75 million for housing issues)
- no less than 19 years ultimate to maturity
- a number one title date between seven and 16 years
- no less than one title at par previous than redemption.
While bonds which may also be noncallable and bonds which may also be subject to the opposite minimum tax (AMT) and fixed-rate re-marketings are eligible for inclusion inside the index, taxable bonds, variable-rate bonds, and private placements are excluded.
Calculating the Bond Buyer Index
The Bond Buyer Index is calculated and printed thru The Bond Buyer, which expresses the price of the index in problems and 32ds (thirty seconds). The associated fee quotations equipped thru six municipal bond dealers are used to calculate the index’s worth two instances a day—at 12 p.m. and 3 p.m. The index is disseminated daily and the weather of the index are adjusted two instances per month.
The futures contracts are quoted in problems and 32ds of essential worth, and the decisions contracts are quoted in problems and 64ths. The unit worth of each contract is $100,000 and a one-32d business in price represents $31.25.
Other Bond Buyer Indices
The Bond Buyer Index provides an indication of the everyday weekly yields of the Bond Buyer 20 (BB20) Index, the Bond Buyer 11 (BB11) Index, the Source of revenue Bond Index, the SIFMA index, and the Municipal Market Data (MMD) Curve.
All of the ones indices are widely watched thru consumers and consumers inside the municipal bond market. The Bond Buyer 20 index, for instance, tracks the yields of 20 customary prison accountability municipal bonds.
