Derivs - Credit

Wednesday’s shock market development saw short-selling research firm Citron allege that biotech firm Valeant Pharmaceutical inflated its sales figures by selling to “phantom captive pharmacies” in a plot reminiscent of the Enron scandal of over a decade ago.

A flow credit trader at a European bank who previously focused on financial names has jumped firms and changed remit to trade corporate credit at Goldman Sachs.

The recent rally in Europe’s iTraxx Main and Crossover credit indices has brought them back to within touching distance of the spread levels they held at the roll in to their latest series, before the end of September spike in volatility. But the Senior Financials basket continues to outperform corporate credit, with some market participants describing the offset as a one-way trade.

European credit index curve trading came into focus this week with some traders and strategists looking to take advantage of what they describe as an anomaly in iTraxx Europe flatness between the five year point and longer tenors.

Matalan’s credit spreads surged wider this week and put pressure on other European retailers after the company dropped an earnings bombshell.

Two previously long and prominent themes of the European financial market have completed a reversal in the past week, with the iTraxx Senior Financials index trading inside the Europe Main index and credit outperforming equity.

Banks on Tuesday settled credit default swaps referencing the Republic of Ukraine at 80.625, the highest recovery on a sovereign credit event auction since they began in 2005.

Eastern Europe is generally viewed by credit investors as one of the safer segments of the increasingly shaky emerging markets asset class. But the aggressive presence of Russia poses risks, as its neighbours know all too well.

Banks on Tuesday settled credit default swaps referencing the Republic of Ukraine at 80.625, the highest recovery on a sovereign credit event auction since they began in 2005.

Commerzbank has hired two senior credit salespeople to its fixed income and currencies business in London.

A credit event auction on Tuesday for swaps referencing the Republic of Ukraine will be the fastest that has ever been put together in the history of the derivatives contract, lawyers have said.

The recent, sudden swoon by widely referenced credit default swap names Glencore and Volkswagen has regalvanised market participant’s call for measures that will improve single name liquidity.