Investors place derivatives bet against US shopping centres

...The scale of concern for the industry's outlook is seen in the loans underpinning US centres through indices that provide investors such as hedge funds with exposure to commercial mortgage bonds.

Investors are targeting a particular index run by Markit called the CMBX 6, that tracks the creditworthiness of a basket of commercial mortgage bonds launched in 2012 and has the highest exposure to loans tied to US centres.

Morgan Stanley analysts note that CMBX 6 has the highest number of JCPenney, Sears and Macy's stores in centres in the series of indices. The lowest "tranche", most exposed to loan defaults, declined the most, falling 10 per cent to $79.62 on Thursday from its peak in January. Late in February the index slid to its lowest level since it was launched in 2013.

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Of the other indices produced by Markit, the series of CMBX are the worst performing in 2017, while the high yield US retail sector has been the only junk industry to suffer losses so far this year, according to Bloomberg Barclays Indices.