Real money eyes long bonds, short CDS on ECB rumours

By Hazel Sheffield
22 Oct 2014

Real money players are considering going long funded instruments such as bonds, versus unfunded instruments such as credit defaults swaps, in light of rumours that the European Central Bank may extend its asset buying program to include corporate bonds, according to strategists at Citigroup.

“We would be long funded instruments over unfunded instruments such as CDS because if the ECB intervenes, effectively distorting the corporate bond market, it should have a bigger impact on bonds than CDS,” Hans Lorenzen, credit derivatives strategist at Citigroup in London, told GlobalCapital

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