Derivs - Credit

A USD60 million differential in open interests to sell debt tied to Tembec Inc. versus orders to buy lowered the recovery value under credit default swaps referencing the troubled forest products company today.

Asian credit default swap spreads stayed generally in the same range despite the U.S. Senate’s approval of the Treasury’s USD700 billion mortgage bailout plan.

The U.S. Senate’s approval of the financial rescue plan didn’t appear to register in flows on Europe’s iTraxx Main index today.

The Securities and Exchange Commission’s move to relax its mark-to-market accounting rules could not have come a moment to soon, but more opaque guidelines for valuing the securities will likely raise the cost of credit default swap protection.

Spreads on AAA asset-backed securities permanent credit default swaps are showing no signs of improving after widening out since last week.

BNP Paribas has seen a surge in flows amid the turmoil in financial markets following the bankruptcy filing by Lehman Brothers.

Société Générale today closed on the purchase of a five-year credit default swap for a EUR2.98 billion (USD4.2 billion) loan portfolio on its balance sheet known as Atlas VIII.

Bank of America has hired Sang Min and Clive Greenway for its credit trading team in London.

Trading on Europe’s iTraxx indices has been sluggish this week with news from the U.S. and the roll over to Series 10 failing to trigger flow.

If the bailout plan gets passed eventually, the government should have little difficulty hiring junior staffers to work on distressed asset acquisitions. But, getting the more senior valuation talent will be tougher, according to one headhunter.

Investor jitters are making it difficult to give a short-term outlook for credit spreads on the Brussels-based bank Fortis, according to Dresdner Kleinwort analysts.

The rollover of all but two Markit CDX North American indices has been postponed until Thursday due to uncertainty over the bailout plan.