Introduction
The 2025 credit landscape was defined by a powerful combination of elevated starting yields, robust investor demand and episodic policy‑driven volatility. Markets entered the year on firm footing, supported by resilient economic activity and a Federal Reserve that maintained a steady policy stance following its late‑2024 easing cycle. Through the first quarter, credit spreads were broadly stable across regions, reflecting a constructive backdrop and strong technicals.
That calm was interrupted in April when tariff announcements and heightened geopolitical tensions triggered a sharp, synchronized repricing across global credit. Investment grade and high yield spreads widened rapidly in both the U.S. and Europe, and credit‑volatility indices spiked to their highest levels since 2020. Despite the severity of the episode, markets stabilized quickly as policymakers signaled flexibility and economic data remained broadly resilient. By mid‑year 2025, spreads had retraced a significant portion of the widening, and by the end of the year many segments finished at or inside their January levels.
Against this backdrop, trading activity across fixed income index products surged to new heights. CDS indices reached an all‑time record of USD 38.4 trillion traded, while CDS index options hit a new high of USD 16.5 trillion. Standardized TRS volumes remained near historic peaks, with the iBoxx USD Liquid Leveraged Loans Index setting another annual record. Index futures saw the strongest expansion in their history, with year‑end open interest rising more than tenfold over the prior two years. ETF activity also accelerated, with several index series posting record volumes as investors leaned on scalable, transparent tools to manage exposure through periods of stress.
Across products, regions and market regimes, 2025 underscored the growing importance of index‑linked credit instruments as primary channels for liquidity, risk transfer and tactical allocation. This report reviews the full‑year evolution of credit spreads and volatility, as well as trading activity across the key components of today’s fixed income index credit ecosystem.
Credit Spreads and Volatility
Credit markets were orderly for much of 2025 outside of a sharp volatility shock in April. In the U.S. investment grade universe, the CDX North America Investment Grade traded near 50 bps through Q1, surged to 81 bps on April 8, and then retraced toward 50 bps into year‑end 2025. The iBoxx $ Liquid Investment Grade OAS followed a similar pattern—rising to 136 bps at the April peak before easing to 89 bps by the end of year. Credit VIX® reflected the shock in real time: the CDX/Cboe NA IG 1‑Month Volatility Index spiked to 93 bps in early April before settling back near 22 bps by year‑end 2025.
The U.S. high yield segment saw a larger swing. The CDX North America High Yield began the year at 305 bps, spiked to 476 bps on April 8 and finished the year around 316 bps. The iBoxx $ Liquid High Yield OAS moved in tandem, peaking above 330 bps in late March/early April and ending the year near 302 bps. The CDX/Cboe NA HY 1‑Month Volatility Index jumped to 457 bps at the height of the April stress and subsequently normalized into the low 100s by December.
Europe exhibited the same mid‑spring stress and a more pronounced compression into the end of the year. The iTraxx Europe 5Y reached 85 bps at the April highs before tightening to 51 bps by the end of December, while the iBoxx € Corporates OAS fell from triple digits at the peak (above 135 bps) to 89 bps at the end of the year. In higher beta European credit, iTraxx Crossover 5Y spiked to 427 bps on April 9 and finished notably tighter at 244 bps; the iTraxx/Cboe Europe Crossover 1‑Month Volatility Index similarly peaked above 470 bps during the April episode before subsiding.
Asia ex‑Japan and emerging markets followed the same arc. The iTraxx Asia ex‑Japan 5Y index jumped to 110-125 bps in April before ending near 65 bps; the corresponding iBoxx USD Asia ex‑Japan OAS eased from mid‑April highs to 91 bps by the end of the year. The CDX Emerging Markets 5Y index moved from the 160-170 bps range to a 230 bps April peak and tightened into 124 bps by the end of December; the iBoxx USD Emerging Markets Sovereigns & Sub‑Sovereigns OAS moved in parallel, peaking above 250 bps before ending near 156 bps.
Taken together, the April shock was the defining macro event for 2025 credit—producing a synchronized spike in spreads and credit‑volatility gauges across regions—followed by broad normalization and, in many cases, year‑end levels at or inside their early‑January marks.
