Derivs - Credit

The International Swaps and Derivatives Association has voiced opposition to requiring mandatory initial margins for non-centrally cleared swaps, according to a response letter to the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.

Institutional investors have been expressing interest in low cost payer spreads on CDX.IG series 19, such as the 95-120 Dec. 2012 payer spread, in a bid to lock in gains in their long credit portfolio as going into the year-end.

The Royal Bank of Scotland is set to reduce the size and footprint of its investor products and equity derivatives unit globally in an effort to take out significant costs from the business, according to officials. As part of the move, led by Peter Nielsen, ceo of markets, the investor products and equity derivatives unit will be integrated with the firm’s non-linear trading business.

RBC Investor Services has launched a global middle and back-office platform for listed and over-the-counter derivatives.

The 10Y 7-10% CDX.IG9 tranche is being singled out as an optimal short based on the view the recent credit rally is temporary and spreads will widen again, according to Citigroup.

Ever since European Central Bank President Mario Draghi started talking about bumblebees, the secondary credit markets have been reasonably well behaved. This was even more the case when the ECB announced its OMT program and the Federal Reserve followed up that act with QE3. After all, investors are understandably reluctant to challenge the resolve of central banks.

Structured product dealers in Asia Pacific are redeeming legacy transactions across asset classes on their call dates. The moves wind down deals with high funding costs and allows banks potentially to issue simpler lower cost notes, according to structurers in Hong Kong and Tokyo.

The International Swaps and Derivatives Association has called on Canadian regulators to make clear which trades, entities, transactions and markets are covered in the latest over-the-counter central counterparty clearing consultation from the Canadian Securities Administrators.

Markit’s newly-created CDX index for Latin America corporates has been actively traded with liquidity exceeding traders’ expectations and average volume per day at around USD50-80 million.

Sovereign credit default swaps face a bumpy ride for the rest of the year. The troika—the European Commission, the International Monetary Fund and the European Central Bank—reviewing Portugal and Ireland, Greece’s expected additional bailout funding and various government meetings in Europe are hanging over the market, Fitch Ratings said.

Angelo Gordon & Co., a USD24 billion investment manager, has hired Mike Pope, managing director of loan sales at Goldman Sachs, as head of credit trading in New York.

Credit default swaps on Schaeffler Finance were actively traded by investors, as it became a new component in Markit’s iTraxx Crossover index S8 that was rolled out yesterday.