The iBoxx Industry Classification Structure (iBICs) is a comprehensive framework designed for classifying fixed income securities, particularly corporate bonds. As the fixed income market evolves, the need for a robust classification methodology becomes critical. iBICs enhances the market’s understanding of bond issuers' business activities and revenue sources, facilitating informed investment decisions through clear categorizations.

Key Features

Clarity and Consistency
iBICs provides consistent classifications across various bond types, aiding in risk assessment and index management.
Enhanced Transparency
By categorizing bonds based on primary business activities, iBICs promotes market transparency, helping investors understand performance drivers and risks.
Support for Investment Analysis
The structured approach allows for effective analysis of market trends and sector performance, helping to identify potential opportunities and risks.
Benchmarking and Performance Measurement
iBICs facilitates the creation of benchmarks for evaluating investment performance against similar securities or indices.
Adaptability to Market Changes
Regular reviews and updates ensure that iBICs remains relevant and reflects the current state of the market.
Market Representation
iBICS reflects the diverse bond market landscape.

Methodology

iBICs is organized into a hierarchical framework with five levels:

      • Corporate Sectors: 2
      • Economic Sectors: 12
      • Market Sectors: 21
      • Market Sub-Sectors: 44
      • Industries: 131

Broad Classifications help categorize bonds into high-level groups, while Narrow Classifications isolate systematic risk factors. The most detailed Granular Classifications define peer groups for direct comparisons among similar securities.

Review Process

The iBICs operates on a continuous review basis to maintain accuracy and relevance:

      • Annual Review: Each issuer's classification is reviewed at least once a year to validate its relevance.
      • Criteria for Review: Analysts consider shifts in revenue sources and changes in core business activities during the review.

Monitoring and Adaptation

iBICs employs comprehensive monitoring processes to track corporate events such as mergers and acquisitions that may affect classifications. This proactive approach allows the structure to remain responsive to market changes.

Structure Review

The iBICs structure undergoes regular monitoring to adapt to shifts in the global bond market. Changes are implemented after the close of the first Friday of March, June, September and December, allowing market participants to prepare for updates.

Determining Classifications

The S&P Dow Jones Indices  Index Committee evaluates proposed changes based on long-term trends to maintain stability and reliability in the classification structure.

 

 

The iBoxx Industry Classification Structure (iBICs) may serve as a useful tool for fixed income market participants. By providing a clear and structured classification methodology, iBICs enhances transparency, supports investment analysis and facilitates more informed decision making.

More Information

Frequently Asked Questions

What is the primary purpose of the iBoxx Industry Classification Structure (iBICs)?

The primary purpose of iBICs is to provide a comprehensive and transparent framework for classifying fixed income securities, particularly corporate bonds, to facilitate informed investment decisions.

How is the iBICs structured?

iBICs is structured as a five-level hierarchical framework consisting of 2 Corporate Sectors, 12 Economic Sectors, 21 Market Sectors, 44 Market Sub-Sectors and 131 Industries, allowing for varying levels of granularity in classification.

How often are the classifications within iBICs reviewed?

Each issuer assigned an iBICs classification is reviewed at least annually to ensure that the classification remains valid and reflects any significant changes in the company’s business model or segments.

What factors are considered during the review process of iBICs classifications?

Analysts assess various factors, including shifts in revenue sources, changes in core business activities and notable corporate events, to determine if a reclassification is necessary.

How does iBICs adapt to changes in the bond market?

iBICs is designed to evolve alongside the fixed income market, with regular reviews and updates to maintain the classification’s relevance and accuracy in reflecting current market dynamics.

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