Hedge funds, real money tap payers on Main to hedge a June widening

By Hazel Sheffield
07 May 2014

Hedge funds are buying payers in iTraxx Main with expiries in May or June and strikes around 90-and-95 basis points. The trade is designed to hedge against a potential widening of spreads in June.

Paola Lamedica, credit sector specialist at BNP Paribas in London, said some investors are also shorting Main believing the risk of a moderate, short-dated correction has increased on the back of overstretched valuations. “If the market is ripe for a correction, any hawkish news will serve as a ...

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