Hedge funds take profits on Fiat CDS vs. XO

Hedge funds have been taking profits on credit default swap trades on Fiat after reports of a potential takeover of the company in a German magazine prompted the name's five year CDS to snap 19bp tighter. Fiat later denied the rumour, however a further report by Handelsblatt, a German business newspaper on Friday suggested that investment banks had been hired to find interested buyers for shares in Fiat owned by the Agnelli family. Fiat CDS were trading 11bp tighter again on Friday lunchtime, at 254bp.