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Market Absorbs $550 MLN BWIC

15 Dec 2006

Almost all of a $550 million BWIC [bids wanted in competition] successfully traded last week after a seller came to market offering to sell loan credit default swap protection on a portfolio of about 50 names, according to traders.

Almost all of a $550 million BWIC [bids wanted in competition] successfully traded last week after a seller came to market offering to sell loan credit default swap protection on a portfolio of about 50 names, according to traders. There were 61 tranches in the portfolio of five-year contracts on mostly large cap names. "Most people put bids in," said a trader. He said buyers of protection came from across the investor universe and were not concentrated in a particular class. "It shows improved liquidity in the LCDS market," said another dealer.

BWICs have become more common in the LCDS space in the past couple of months as investors seek to sell LCDS protection. In November, an institutional investor believed to be a hedge fund, came to market seeking to sell protection on about 78 names, consisting of five and seven million contracts for five and seven years (CIN, 11/20).

15 Dec 2006