Bond market indexing

 was initiated in the early 1970s as a means by which to measure bond performance. Unlike stocks, which mostly trade on exchanges, bonds are primarily traded in the over the counter market. The first bond indexes were thus developed by investment bankers.

In 1973, Kuhn, Loeb created three U.S bond indexes and Salomon Brothers introduced its Long-Term High-Grade Corporate Bond Index. Kuhn, Loeb was subsequently acquired by Lehman Brothers and the indexes became the Lehman indexes, which were to become the dominant U.S index family. Salomon Brothers was subsequently absorbed by Citibank.

By the early 1990s, U.S. indexes were being published by J.P. Morgan, Lehman Brothers, Citibank and Merrill Lynch After the collapse of Lehman Brothers in 2008, Barclays Capital acquired the Global Family of Indices as part of its acquisition of Lehman Brothers' North American Capital Markets and Research groups. All legacy Lehman Brothers benchmark indices were rebranded as Barclays Capital Indices. Bank of America acquired Merrill Lynch on Jan. 1, 2009. The indices will remain as Merrill Lynch. Index providers S&P and Morningstar also provide bond indexes.

In 2002, a consortium of leading European and U.S. banks launched the Euro and Sterling iBoxx indexes. The iBoxx indexes are now the primary indexes used in Europe and the U.K. both for benchmarking and as the basis for exchange-traded funds (ETFs) and structured products.

US bond market indexes are defined by two bond market factors: credit quality and term of maturity (short-term, intermediate-term, long term).

Major index providers
The major bond index providers are listed below:

Papers

 * A review of alternative approaches to fixed income indexing, Vanguard Institutional, 02/14/2012.