Funds close relative value hedges as polls show Scottish secession unlikely

By Hazel Sheffield
20 Aug 2014

Hedge funds are closing relative value trades on financial names which were traded to hedge a potential widening if a secession vote in the Scottish referendum were to occur on September 18. One such trade, tipped by strategists at BNP Paribas in London, was closed this week after polls have increasingly shown that Scotland will choose to stay part of the UK.

In February, Pierre Yves Bretonnière, credit sector specialist at BNP Paribas in London, recommended investors go long €20 million UBS subordinated credit default swaps and short €25 million Lloyds senior CDS. An alternative trade was to go long €24 million UBS senior CDS and short ...

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