Lehman crash exposes issuers to swap losses

17 Sep 2008

Lehman Brothers' bankruptcy filing has potentially left issuers of billions of dollars of structured notes unhedged and at risk of markets moving against their underlying positions. The next move for issuers in this situation is unprecedented.

“Most of the issuers I’ve spoken with are considering Lehman to be in default,” said one MTN issuer, adding that he expected issuers to seek alternative hedges for their liabilities, in essence re-swapping the deals.

Lehman was, in the past one of the largest dealers of structured notes for ...

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