Derivs - Credit

The Bush administration’s decision to lend USD17.4 billion to automakers General Motors and Chrysler has brought about a legal question as to whether the event will trigger credit default swaps on the names.

Seer Capital, a New York-based securitized products hedge fund, has hired Dave O’Brien as a director to analyze residential mortgage credit.

The International Swaps and Derivatives Association has applauded the Reserve Bank of India’s plans to introduce credit default swaps to India next year, but has questioned its move to allow CDS only as an exchange-traded product.

The Federal Reserve’s decision to lower its overnight interest rate to a target range of between zero and quarter of a percentage point caused the CDX North American Investment Grade index series 11 to tighten dramatically yesterday.

Some market participants are starting to look at how they can benefit from their own credit spreads trading too wide by selling self-referencing credit derivatives from a third-party issuer, according to one market participant involved in structuring such a deal.

The price to settle loan-only credit default swaps referencing Hawaiian Telecom Communications Inc. landed at 40.125% today, meaning sellers of protection on the loans will pay out just under 60 cents on the dollar.

The iTraxx Sub Financials index popped this morning in response to Deutsche Bank’s decision not to exercise a call option on a EUR1 billion (USD1.44 billion) subordinated bond due Jan. 2014.

Investors are rushing to pick up one-year default protection on auto names, pushing the price far beyond five-year rates.

An Asian sovereign wealth fund is looking to use credit derivatives to actively manage its credit exposure, according to one Hong Kong-based analyst who has spoken to the fund.

A U.S. Bankruptcy Court judge has granted Lehman Brothers Holdings the right to employ Natixis Capital Markets as a strategic advisor, with special focus on its derivative positions.

A court hearing in New York this morning to determine whether Lehman Brothers will be able to realize the value of certain in-the-money swaps by auctioning them off may not apply to objecting parties.

Kenny Chong, managing director and head of Asia ex-Japan credit trading at Credit Suisse, has exited the firm.