Investors turn to EU CDS as proxy Russian hedge

Russian and EU flag
By Hazel Sheffield
11 Sep 2014

Hedge funds and asset managers with exposure to Russian banks have been buying credit default swaps on EU companies with exposure to Russia, implementing a proxy hedge in light of new sanctions against Russian reference entities, writes Hazel Sheffield, just as one law firm warned of the perils of trading CDS on the country's credits.

While the trend started following initial sanctions levied against Russian entities, investors are showing renewed interest in light of recent EU sanctions, according to market participants. A senior credit strategist in London told GlobalCapital funds are buying protection on Austrian banks, such as Raiffeisen Bank International, as well as ...

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