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Derivs - Credit

  • New instrument follows green and SRI bond futures — more products to come
  • Barclays has hired a senior trader from JP Morgan in New York to replace Naseer Al-Khudairi as head of electronic trading and digital strategy for its markets division.
  • Some €700m of CDS contracts referencing Europcar’s debt have been rendered worthless thanks to a technical squeeze in the CDS auction on Wednesday, in a blow for investors who thought they’d hedged their exposure to the troubled car rental firm. The controversial result threatens to reignite debates about whether the CDS market is fit for purpose, ahead of an expected wave of restructurings in the year to come.
  • The lack of clarity over whether the UK and the EU will clinch a trade deal before the end of the year also makes it harder for those in financial markets to know whether equivalence decisions will be granted for the trading obligations for derivatives (DTO) and shares (STO).
  • Whether or not Schuldschein debt is deliverable under CDS auctions is becoming more than an academic discussion, as analysts look to companies like travel firm Tui’s financial future. While the instrument fits the criteria as relevant debt for a CDS auction, the private nature of the contract could prevent the Determinations Committee from ruling.
  • As market participants prepare for the end of the Brexit transition period on December 31, the European Securities and Markets Authority has said it will not change requirements on where derivatives can be traded, even though this could cause problems for UK branches of EU investment firms.
  • The US Commodity Futures Trading Commission and the Bank of England signed a memorandum of understanding on Tuesday regarding the oversight of derivatives clearing.
  • Permira opted to rescue its debt purchasing portfolio company Lowell from the restructuring that many thought was imminent, with the largest slug of equity support any sponsor has injected in Europe since the coronavirus pandemic began. Covid-19 has crushed cashflows for some debt purchasers, but next year should be a bumper year for NPL buying — for those firms with cash to do so, writes Owen Sanderson.
  • Citi has appointed Christopher Perkins and Sabrina Wilson as global co-heads of its futures, OTC clearing and FX prime brokerage business, following Jerome Kemp’s retirement from the industry.
  • Interdealer broking giant TP ICAP has advanced further into buy-side revenue streams, with specific plans to target fixed income markets, as it clinched its acquisition of trading platform provider Liquidnet for an initial $575m last Friday.
  • GlobalCapital is delighted to announce the winners of its 2020 Global Derivatives Awards.
  • Series 34 of the iTraxx Europe Crossover index saw seven fallen angels join the index, following the three added in March’s roll, as the coronavirus pandemic pressures sectors such as autos, transport and retail.