Derivs - Credit

Some investors in collateralized debt obligations facing potential events of default are battling to gain control of the deals to stave off liquidation.

Credit correlation continued to drop last week, prompted by renewed fears of default risk and issuance of leveraged super senior tranches.

Commercial banks in Asia are looking to take credit derivatives market share away from investment banks, seeing an opportunity as fallout from Bear Stearns makes players more conscious of counterparty risk.

Asian structured credit players are expecting to see an uptick in restructuring of credit products, such as credit-linked notes, as uncertainty, notably surrounding financial corporations, has spooked investors.

Laura Schwartz, the former head of collateralized debt obligations asset management at ACA Capital, has joined The Winter Group.

The credit markets continued their volatile swings last week ending on a firmer note by Thursday as investors sought solace in the Federal Reserve's groundbreaking actions to bolster the financial system.

Most market participants would prefer to road test the credit derivatives cash settlement protocol in Europe at least once before deciding how to hard wire the settlement auction into documentation.

Syndicated loan investors are interested in a new contract that will allow them to gain exposure to the credit of small, private companies.

Etienne Varloot, a structured credit strategist at UBS in London, is leaving his research position covering credit derivatives to join the Swiss firm's principal finance unit.

Commercial banks are looking to snap up business from investment banks as players become more conscious of counterparty risk since Bear Stearns' collapse.

Hedge funds that sold credit default protection on Bear Stearns have been buying up shares to protect the plays.

A renewed focus on counterparty risk has synthetic collateralized debt obligation investors spooked about the risk swaps underlying the deals could terminate early at a loss.