Derivs - Credit
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The underlying strength of Asian credits should offer a buffer in the second half of the year against a distressed scenario.
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Credit default swaps on government sponsored enterprise subordinated debt were tighter with the passage of the sweeping housing bill by the U.S. House of Representatives.
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U.S. lender Washington Mutual is likely to stay the focus for many credit default swaps traders over the next few days, said Francois Popon, single name trader at SG Corporate & Investment Banking in London.
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Enquiries from local Japanese investors concerning complex structured credit products, such as collateralized debt obligations are at a low.
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SG Corporate and Investment Banking is marketing a credit linked note which is exposed to speculative-grade European names in the iTraxx Crossover Series 9 Index.
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The credit markets were volatile this week as the major indices bounced in a range amid light summer trading. -
Last week’s debt swap by media company IAC/InterActiveCorp created a windfall for credit default swap basis traders.
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Japanese consumer finance firms—notably Takefuji and Aiful—are continuing to take a pounding in the credit default swap market.
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Corporate correlation dealers were busy last week hedging their jump-to-default risk—the risk that a company in a portfolio will default suddenly.
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Officials involved in the new credit derivatives clearinghouse project have decided that clearinghouse participants will contribute margin to protect against gap risk, or the risk that a member firm will blow up.
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Some investors are using equity plays as hedges on credit trades—a shift from the usual hedge using credit protection—to take advantage of the more liquid stock options market
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Spreads on U.S. banking names have been hit hard this week, with Washington Mutual widening about 70 basis points on Tuesday alone to close at 791 bps.
