Derivs - Credit

The cost of protecting bonds issued by French IT services and consultancy Capgemini blew out yesterday after the company issued USD763 million in convertible securities, maturing Jan. 2014.

European dealers are leaning toward four to six fixed coupons on the new-style credit default swap contracts set to be implemented there July 20.

Deutsche Bank analysts are advising investors to buy sovereign credit default swap protection on the Philippines, believing spreads are tight relative to fundamentals and should widen out.

CME Group, which has partnered with Citadel to clear credit default swaps, has regulatory approval for its offering but is waiting for critical mass to launch, said Kim Taylor, managing director and president of the clearing house division at yesterday’s Futures Industry Association OpTech 09 conference in New York.

The volume of market participants that have signed up to the credit default swap big bang hardwiring protocols, launched March 12 by the International Swaps and Derivatives Association, numbered 1,712 by press time. The window for adhering parties closed at 5p.m. today.

Credit default swaps on German retailer Metro Group have tightened back to 340 basis points, down from their March 27 high of 370 bps when Moody’s Investors Service downgraded the company’s 66% stakeholder, Haniel Group. But spreads on the name are still volatile.

Andy Kimura and Michael Marriott, heads of Credit Suisse’s structured products business, have retired. Both finished up last week.

Steven Liu, a credit default swap trader specializing in banking and insurance names at Bank of America, recently joined Hexagon Securities in New York.

Interdealer broker MF Global has shuttered its credit default swap brokerage business. Among those that were reportedly cut in the past few weeks were Chris Houchins, Gibson Kinloch, Steve Luskey and Tim Moris.

Banks in Asia who use international accounting standards may have to wait at least nine months from now before any change in valuing illiquid products becomes law

The North American credit default swap market will start trading the new standardized CDS contracts Wednesday, but some are worried the industry is not adequately prepared.

The volume of companies whose credit default swaps are now trading upfront has more than doubled in the past four months.