Derivs - Credit

European hedge funds have been selling protection on the first loss tranche of the off-the-run Markit iTraxx Europe series 9 and hedging three of the names in the tranche in order to collect the higher yield without assuming default risk.

Funds holding credit default swaps on sovereigns are being cautious about buying recovery locks.

Alan Alsheimer, the former executive director of macro credit trading at Goldman Sachs, has joined New York hedge fund Argonaut Capital Management.

Hedge funds have been buying credit default swaps on the Netherlands after the country’s prime minister resigned, despite the spread on the name tightening somewhat after a positive sovereign debt auction.

Société Générale is recommending selling credit default swaps on Houston, Texas-based energy company Noble Corporation due to better-than-expected earnings and expectations of new debt issuance in the next 12 months.

Tradition is readying the launch of its European electronic trading platform in the U.S. by the end of 2012, pending the readiness of banks to sign up given regulatory uncertainty.

Philip Jan Kok, managing director of credit solutions at Bank of America Merrill Lynch in London, has left after nine months at the firm.

Spain was again the centre of attention this week due to two separate debt auctions. The sovereign’s bond yields surpassed 6% and its credit default swaps widened beyond 500bps--two important psychological levels.

The financial crisis has resulted in an increase in disputes concerning market standard documents, including a number of cases dealing with the consequences of an Event of Default under the ISDA Master Agreement.

Hedge funds have been buying quanto credit default swaps on Spain over the last week to take advantage of agreements that obligate firms to buy back quanto CDS that they sold last year.

The Volcker Rule and regulations adopted by the Basel Committee on Banking Supervision will likely have a negative impact on banks’ future income growth because of new limits on their market-making activities, according to Bernstein Research.

The eurozone debt crisis awoke from its slumber last week and it is set to remain in focus over the coming weeks and months.